Social Security as a Form of Retirement

It has been argued that there is no need for a separate retirement plan because when we reach the retirement age Social Security will cover our needs. The truth is American’s don’t know that the Social Security System is failing. To meet your own personal needs when their needs when they retire, all American’s are in need of a retirement plan. Millions of the country’s citizens depend on Social Security, yet the program is unsustainable. . “But Social Security was never meant to be the only source of income for people when they retire. Social Security replaces about 40 percent of an average wage earners income after retiring and most financial advisors say retirees will need 70 percent or more of pre-retirement earnings to live comfortably” (Social Security Online, 2011 para. 4). Continual changes in the Social Security System make it almost impossible to count on Social Security as a sole source as a retirement plan
Social Security is a fixed income that increases marginally. Retirement is something that should be planned for carefully. The Social Security Program was created to provide benefits to retirees, the disabled, survivors of workers who have died, and dependents of beneficiaries. ”A one-time payment of $255 is payable to the surviving spouse if he or she was living with the beneficiary at the time of death, OR if living apart, was eligible for Social Security benefits on the beneficiary's earnings record for the month of death. If there is no surviving spouse, the payment is made to a child who was eligible for benefits on the beneficiary's earnings record in the month of death” (Social Security Online, 2006 para. 5). Today’s funerals cost well over $10,000. “Baby boomers will begin to attain age 65 beginning in 2011 (for those born in 1946) and continuing through 2029 (for those born in 1964). As highlighted in Figure 1, the older age dependency ratio will quickly increase as a result of the aging of the baby-boom generation, from about 21.2 to 34.3 older dependents per 100 persons of working age between 2011 and 2029” (Shrestha, 2006 para. 7). This means there will be more people retiring then there are working. “The result is that the worker-to-beneficiary ratio has fallen from 16.5-to-1 in 1950 to 3.3-to-1 today” (Shrestha, 2006 para. 1). Social Security is facing financing problems since people are living longer and the birth rate is low that why it is important to take retirement into your own hands. Americans think that Social Security will be a simple retirement plan. The truth is the Social Security System can be very complex and confusing. After all, Americans pay Social Security by having it taken out of payroll deductions, and should expect that they will receive that money and more after they retire. At some point in your like Social Security will have an effect on you. The Social Security System works like this: when you work, you pay taxes into Social Security. The money goes to people who receive Social Security now; it is not a personal account with your name on it (Social Security Online, 2011 para. 3). “Social Security benefits replace a percentage of your earnings when you retire, become disabled or die (Social Security Online, 2011 para. 11). There are three thoughts on how the United States can correct the Social Security Administration; do nothing and let Social Security to run its course, Social Security can be revised, or the system can go privatized. In the past, the two parties the Democrats and Republicans have looked at this in two different views. The Democrats have not agreed to change the program that Roosevelt’s New Deal created in 1935. The Republicans think Social Security is contrary to capitalism. As time has passed, Republicans have learned that Social Security is number one on Americans minds and has made it untouchable.
Many American’s think that the equity he or she have acquired in his or her houses and his or her social security income would be enough for him or her to retire comfortable. Admittedly, this was my grandmother’s plan when she retired. My grandmother planned on having her house paid off before she retired so all she would have to worry about was utilities. This was not the way it happened though, some things came up and she didn’t have her house paid off before retirement age. Most people believe they cannot afford to save money and they have plenty of time to save for retirement. Many American’s think they have their whole life to save why not have fun and live now. They had to pay bills or needed a new car or it was time to take a vacation, besides they would have equity in their home by the time they were old enough to retire or wealthy enough to stop working. They would have social security, what they did not realize is this will not be enough to protect them from tough economic times
To be honest, I never thought about a retirement plan until my sister’s mother-in-law passed away without any warning. She gave no symptoms of an existing illness. When she passed away she had no life insurance policy or anything, the Social Security program gave them $255 when she passed. Her funeral was almost $11,000 and that was using the bare minimum with no fancy casket or anything. The $255 didn’t cover anything. Luckily, she did have a 401 K plan that kicked in and went to her oldest son (my sister’s husband). With that money they paid off the funeral home and hospital bills. Sometimes, the unexpected happens and you never reach retirement age. Without the 401 K plan, my sister and brother-in-law would be still making payments to the funeral home. 401 K plans are good to have, even if you don’t make it to retirement age.
In conclusion, just because Social Security is a provided by the government doesn’t make it permanent or reliable. Social Security only replaces about 40 percent of an average person’s salary. This leaves Americans with the other 60 percent to be responsible for. This is why American’s needs to take retirement into his or her own hands and start planning now. When it is time for our generation to retire Social Security might not even be around. Life happens, it is better to be prepared than unprepared.

Works Cited

Shrestha, L. B. (2006, October 27). Age Dependency Ratios and Social Security Solvency . Retrieved September 20, 2011, from CRS Report for Congress: http://aging.senate.gov/crs/ss4.pdf
Social Security Online . (2006, November 28). Retrieved September 22, 2011, from socialsecurity.gov: http://www.ssa.gov/pubs/deathbenefits.htm
Social Security Online . (2011, August ). Retrieved September 11, 2011, from ssa.gov/pubs/10024.html