What does social security mean to you?
To me, it’s a term I associate with wrinkles and dentures. It’s something that doesn’t concern me until my hips chronically hurt, and I move to Florida to play bingo with my few surviving friends. It’s a mundane historical term I’ve convinced myself won’t be pertinent for me because of how much money I’ll make as a writer because this line of work is known for its sparkly tax bracket. How I wish I could remain that blasé.
In 1935, the year when social security was signed into law, the average life span in America was about 61. The Act created a social insurance program designed to pay retired workers age 65 or older a continuing income after retirement. Therefore, the average worker was dead before he or she was able to receive benefits. That’s the government, always looking out for you.
Today, the average life span in the U.S. is 79, meaning social security is a much more relevant and necessary institution than it was in the '30s. The benefits are primarily funded through a payroll tax paid by the current working class that supports those who are retired, disabled or have suffered the death of a spouse or parent. In the past, those taxes have generally been able to cover all the expenses of the program. Notice how I said generally.
Hug your relatives and pray they leave an inheritance because we’re not getting jack from the government. Essentially, a recession sucks for a lot of reasons, but here’s one more to worry about.
Increasing life spans and dismal economic outlooks have experts shrugging at younger generations while saying “good luck with that.” In a couple of decades, we’ll have a lot more to worry about than the exorbitant price of eggs.
Because grandma and grandpa are living longer, more funds are being taken out than are going in. In fact, in 2021, Social Security started dipping into reserve funds that it’s accumulated over the years to help cover benefit payments. The Congressional Budget Office projects the reserves will be depleted by 2033, a swift 10 years from now. Then the program will only be permitted to pay 75 to 80 percent of benefits under the law, resulting in a wide-spanning cut for all beneficiaries.
Social security will play a limited role in future retirement incomes unless the government decides to compensate for the diminishing reserves with higher taxes. That’s where you and I come in.
Current recessionary conditions have done little to alleviate this stressor, as people are saving less and less. In a recent survey, Suze Orman, a personal finance expert, found that two in three Americans couldn’t cover a $400 emergency expense without tapping into credit cards or taking out a loan. A year before, 68 percent of respondents to a similar Federal Reserve survey said they could finance a $400 emergency with cash rather than borrowing.