Just like in the year 1990, the Social Security is under attacked once again. It is believed that Social Security is in big trouble and that it will fail. It seems that the younger people, and people who aren’t retired yet, expect to get zero percent income from Social Security when they reach the retiring age. It seems that their opinions are not correct, and that the other Social Security myths are not true either.
The Most Popular Myths about Social Security
The most common opinion about Social Security is the fact that it is going bankrupt. That is false, and even if it would go bankrupt, the checks would still come. Currently, the program has money until 2036, and it is very likely that it will continue to have them after that date as well. The payroll taxes would cover 77 percent of the future benefits, so that is reassuring.
Another popular belief is that people, who keep their Social Security taxes in their own investment account, will have higher benefits. That is not true, for the simple fact that it is not common for people to put money aside regardless of their financial situation. It would imply that one will save money even if he cannot put food on the table, in order to receive a higher retirement fund later in life. In order to match the benefits provided by the Social Security, you would need to invest more money. For example in order to get around $2,300 per month, you would have to save around $580,000, and that is impossible to do, unless you make hundreds of thousands of dollars per year.
Many believe that the reason why the Congress made changes to Social Security in 1983, was to build a fund for boomers when they retire. That is not true,because the reason why they raised the taxes and cut some of the benefits was to cure an insolvency would have taken place without this change. Their decision led to a trust fund reserve of $2.6 trillion.
The Importance of Social Security
It is also believed that you will receive the exact amount of money you put in the Social Security. That is not true, because you do not pay for your own fund. The taxes you pay are used for the earlier generation of retirees, and the current workers are paying for you. The amount of your benefit is influenced by the amount of money you earned,it is also influenced by the spousal benefit in case you get one, how low you live, when you retire, and so on.
The young ones believe that the Social Security is useless for them. That is not true, as the Social Security also aids people who have young children and the widowers, and orphans as well. The workers, who become disabled, regardless of the age, benefit from the Social Security.
As you can see, the Social Security has a purpose, and it is a very important one. Choosing not to invest in it would be a terrible idea which would affect all the generations.