Social Security benefits date back to 1935, when then President Franklin D.
Roosevelt implemented the Social Security Act to help provide retired American workers with a fixed income after their working years ended.
Since then, all working Americans have been taxed on earnings and have paid into the system with the expectation that benefits will be available to them upon reaching the government's retirement age.
Unfortunately, all has not gone as planned with this program.
According to the Congressional Budget Office and the New York Times, outgoing payments exceeded incoming taxes for the first time in history in 2010 - a problem the U.
S.
didn't expect to experience until 2016.
Though the Social Security Administration has reserves from years of funding, it's not enough to sustain the current payment system beyond the late 2030s.
Unless congress changes the way the system works, there will be no government back-up plan for retirees.
Federal law prohibits annual payments from exceeding the program's balance, meaning there are no other federal funds available to rescue benefits.
As of 2011, the full retirement age is 66, though you can begin drawing reduced benefits earlier at age 62.
However, with the future of the Social Security system in jeopardy, it's likely these ages could increase to help conserve funding.
In fact, the federal government may also enact other changes to this program - all of which would alter the system as we know it.
Alternatives available to lawmakers that could alleviate some of the system's financial problems include the following: raising Social Security taxes on workers, raising other taxes and designating a portion of them for Social Security benefits, or privatizing a portion of these benefits - allowing each individual worker more control over his or her retirement benefits.
Without a solution that incorporates one or more of the above options, benefits may be cut to retirees, which could hurt those on a fixed income - especially as inflation pushes the cost of living higher.
Unless congress comes up with a solution to the problems soon, you need to begin preparing now for a future Social Security insolvency that could leave you with only a portion of your original retirement benefits.
Don't rely solely on your payroll taxes for your retirement nest egg.
Instead, begin stashing away cash in private retirement funds such as IRAs and 401(k)'s.
Private retirement accounts are becoming increasingly versatile, and they also have tax advantages that could help you now as you contribute to your accounts tax-free with a traditional IRA, or during retirement when you begin making withdrawals with a Roth IRA.
Roosevelt implemented the Social Security Act to help provide retired American workers with a fixed income after their working years ended.
Since then, all working Americans have been taxed on earnings and have paid into the system with the expectation that benefits will be available to them upon reaching the government's retirement age.
Unfortunately, all has not gone as planned with this program.
According to the Congressional Budget Office and the New York Times, outgoing payments exceeded incoming taxes for the first time in history in 2010 - a problem the U.
S.
didn't expect to experience until 2016.
Though the Social Security Administration has reserves from years of funding, it's not enough to sustain the current payment system beyond the late 2030s.
Unless congress changes the way the system works, there will be no government back-up plan for retirees.
Federal law prohibits annual payments from exceeding the program's balance, meaning there are no other federal funds available to rescue benefits.
As of 2011, the full retirement age is 66, though you can begin drawing reduced benefits earlier at age 62.
However, with the future of the Social Security system in jeopardy, it's likely these ages could increase to help conserve funding.
In fact, the federal government may also enact other changes to this program - all of which would alter the system as we know it.
Alternatives available to lawmakers that could alleviate some of the system's financial problems include the following: raising Social Security taxes on workers, raising other taxes and designating a portion of them for Social Security benefits, or privatizing a portion of these benefits - allowing each individual worker more control over his or her retirement benefits.
Without a solution that incorporates one or more of the above options, benefits may be cut to retirees, which could hurt those on a fixed income - especially as inflation pushes the cost of living higher.
Unless congress comes up with a solution to the problems soon, you need to begin preparing now for a future Social Security insolvency that could leave you with only a portion of your original retirement benefits.
Don't rely solely on your payroll taxes for your retirement nest egg.
Instead, begin stashing away cash in private retirement funds such as IRAs and 401(k)'s.
Private retirement accounts are becoming increasingly versatile, and they also have tax advantages that could help you now as you contribute to your accounts tax-free with a traditional IRA, or during retirement when you begin making withdrawals with a Roth IRA.
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