It’s coming. Everyone knows it, yet few people know what to do about it.
We’re talking about the looming Social Security crisis. And many Americans are well aware they won’t be able to rely on Social Security to fund retirement — though they’ve been paying into the system their entire lives — and little is being done to brace for impact.
According to the most recent report from the Committee for the Social Security Trust Fund, Federal reserves for retirement income and Medicare will run dry by the year 2033.
Nineteen years may seem like a long time to some, but with more elderly Americans using Social Security as their primary source of retirement income than ever before (thanks to the unprecedented dissolution of company pension plans), and basic demographics unbalancing the scale of beneficiaries versus contributors, Congressional action must be taken in order to avoid future crises.
And therein lies the problem.
Setting the Groundwork for the Coming Crisis
The United States Social Security system was established during the Great Depression — however, the idea of having a social safety net for retired workers dates back to the 1880s in Germany.
The Motley Fool reports: “Because the system came to be associated with Germany’s rise and rapid industrialization, a chorus of academics and policymakers in the United States started calling for a similar program.”
For decades, this system has contributed greatly to the financial security of retired Americans, but since 2010, Social Security has paid out more benefits each year than it has received from its share of payroll taxes. The cause of this problem is simple: demographics.
In the years following World War II, the U.S. saw a huge swell in birth rates — a period known as the “Baby Boom.” Now, as Baby Boomers reach retirement age, Social Security finds itself confronted with a huge burden it may not be able to shoulder.
The first group of baby boomers became eligible for retirement benefits in 2008, and every year since, the number of Social Security beneficiaries is gaining ground compared to contributors. At some point in the near future, the ensuing consequences need to be averted. Somehow.
Unfortunately, confidence in Congress’ ability to reach bipartisan agreement is at historic lows.
And even if public pressure gets heated enough to force lawmakers to find a solution for the Social Security crises, any “fix” is likely to come with painful consequences (i.e. increase in payroll taxes or decrease in benefits to beneficiaries).
Finding a Silver Lining
While Social Security plays a critical role in augmenting income after retirement, the good news is it isn’t the only way to attain financial security during your golden years.
To reach peace of mind for yourself and your family — and to hedge your life saving against inflation and economic downturn well into retirement — consider owning gold bullion and other precious metals.
We invite you to learn more about the many long-term benefits of diversifying with a precious metals IRA. By following our simple 3-step process, you can start investing in your financial security now! If you have any questions about saving for your retirement, feel free to contact us.
How are you preparing for the Social Security crisis?
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