The Social Security Quandry

I was reassured today by the Social Security Administration that Social Security would still be around when I retire. Reminding me that "Social Security taxes you now pay go into the Social Security Trust Funds and are used to pay benefits to current beneficiaries."

To me, that doesn't sound so promising. Given the number of baby boomers who have yet to retire and due to the economic climate coupled with bad investment choices or a lack of retirement planning in general, many will start to draw against Social Security much later in life. Lets say around 70. I don't believe, with that type of influx and draw on the system that there will necessarily be anything left for the 'rest' of us.

Many financial planners tell us that we should expect to have to replace about 70-80 percent of preretirement earnings to enjoy a comfortable life. I tend to disagree. As we get older our medical costs increase tremendously and if you are not fortunate enough to carry your employers health care through into retirement - just the premiums on those plans, at that age will be staggering. And, if we are living longer, there is a much higher chance that we will be living 'through' more illnesses, diseases and disorders to be quite frank. I would say it is in all of our best interest to plan on 100-110 percent of our preretirement earnings to be comfortable. Notice I left out the 'enjoy'.

Apparently, Social Security replaces about 40 percent as of today. They also say that by 2041 there will only be enough funds to pay about $780 for every $1,000 in benefits scheduled. That might actually be a pretty lofty estimate.

At this point in time I've earned enough credits to qualify for the following benefits:

Retire at age 62: $1,197 a month
Retire at age 67 (full retirement age): $1,700 a month
Retire at age 70: $2,109

Of course the actual amounts may differ because of an increase or decrease in my earnings in the future, an adjustment in cost-of-living when I start collecting and of course, the law. Should we be hopeful.

Some information that shocked me: The fact that I have been working for over 10 years now and that my first years earnings was $2,448. I remember how thrilling it was to be taking home that each summer. In total, I have earned roughly $240,000 in my lifetime. With that in mind my Net-Worth should look a little better.