Will Social Security Be Around for Millennials?

From the very first time I learned about the
existence of Social Security, one thing was made abundantly clear… Social Security IS. IN. TROUBLE! That’s right. Social Security’s doomed status has been
the fodder of news anchors and cable pundits for so long that many people don’t even
question it. As a result, many young Americans are starting
to worry whether we’ll ever see a dime of the taxes we pay into it. And this fear isn’t unique to America. There are billions of people that are paying
into similar programs all over the world from From Albania to Zimbabwe. And when people’s future income is messed
with, bad things can happen. Remember the riots in Greece a few years ago? So is Social Security an income source we
should count on in retirement? Or should we just kiss those dollars goodbye
and hope our grandparents enjoy it while they can? The earliest reported beneficiary of the
Social Security retirement benefit was a Mr. Ernest Ackerman. A retired motorman from Ohio, Ernest applied
for a one-time lump sum benefit of seventeen cents the day after the Social Security program
began. Considering he only paid five cents in to
the system during that single day, I’d say he made out alright! In the decades since, the program has expanded
to touch more American’s lives than any other government program, with one hundred
sixty nine million people paying in and sixty one million receiving benefits. Instead of the lump-sum payment Ernest and
his peers received, the program promises retirees an income for as long as they live, presuming
they paid in long enough. In 2019, the average Social Security retirement
benefit is 1,461 dollars per month. The maximum benefit you can collect is 2,861
dollars a month. And in order to receive any credit, you’re
required to earn at least 1,360 dollars per quarter for 40 quarters, aka 10 years. With so many lives and dollars on the line,
it’s no wonder that people tend to panic when they hear reports that the Social Security
Trust Fund is set to run out of money. According to the Trustees Report, funds for
retirement benefits are currently set to be depleted in the year 2034. So was your Uncle Jim right all along when
he blamed that president he doesn’t like for stealing the funds from our retirement? Are we all going to end up eating cat food
in our golden years? That is highly unlikely. For starters, Social Security was designed
to be a pay-as-you-go system. That means current-workers’ tax payments
go to pay current retirees. This is different than something like a corporate
pension. Company pensions go into a big investment
pool and need to be funded in advance just in case the company later goes out of business. But in 1984 President Reagan made some big
changes that resulted in the program bringing in more money than it paid out, and this excess
stockpiled into what became known as the Social Security Trust Fund. One of the most popular myths surrounding
Social Security is the belief that somebody — Congress, George Bush, Barack Obama — raided
the coffers of this fund. This is a false statement. The nearly three trillion dollar surplus that
the Trust Fund accumulated over the past three decades hasn’t been stolen, raided, or pilfered. It’s been invested. Rather than earn 0% interest on your retirement
savings, the Trustees decided to invest in special issue bonds from the treasury, which
earn an average interest of 2.9% per year. Bonds are technically a form of ‘borrowing’,
but it’s a long way from the Federal Government pillaging your retirement. So why are so many people worried about the
future of Social Security? Well, Americans are living longer and having
fewer children. Right now 14% of the population is over 65. By the year 2080, that number will grow to
23%. That means more people drawing from the system
and fewer people paying in. The year 2018 was the first time in 34 years
that the program actually paid more out than it took in. That can only go on for so long. The Trustees currently predict the Fund to
be completely empty by 2034. So what happens if nothing changes by then? Is it back to the cat food? Thankfully, the whole system doesn’t crumble
once the Trust Fund runs out of money. That’s because the system is still primarily
pay-as-you-go, and current taxes will be able to take care of most of the benefits. Retirees would continue to get benefits, but
they would have to be reduced. Taxes from those future workers will only
be able to cover 79% of retirees benefits when the money runs dry. While that’s not awesome, it’s nice to
know that if we don’t make any changes, you can still count on a check, it’ll just
be 20-25% reduced by the time you retire. The good news is that we still have 15 years
to create a solution to rising life expectancies and lower birth rates. There are several possible paths to “fixing”
the shortfall. The simplest (and inevitable outcome if we
don’t find a better way) is to reduce benefits to match income from payroll taxes. Simple, yes, but most folks don’t want their
retirement check cut after a lifetime of paying into the system. A second option would be to simply increase
what tax-payers pay into the system. The current Social Security tax is 12.4% (half
of which is paid by you, and half by your employer). And income above $128,900 dollars is not taxed
for Social Security at all. Lawmakers could increase the percentage paid
in or raise the limit where social security taxes phase out. Surprisingly, voters seem open to doing this;
77% of people say raising taxes is worth it in order to preserve social security for future
generations. Cutting entitlements and raising taxes tends
to make your average lawmaker sweat a little bit. So another solution that avoids both would
be to raise the age of “retirement” for younger workers. The “full retirement age” was originally
62 when the program began, and has since been raised to 67 for anyone born after 1960. We’re living longer, so it might make sense
for retirement checks to begin later. We could also reduce or eliminate the benefit
for wealthy Americans. After all, why would the ultra-rich need a
social security check? Or we could simply abolish the whole government
program and privatize retirement plans, making workers completely responsible for their own
retirement. But considering the frighteningly low savings
rates of Americans, that seems like a stretch. 8 in 10 Americans believe that Social Security
is good for the country and nearly 9 in 10 say it’s now more important than ever. It affects more people than any other federal
program, and has one of the highest favorability ratings. It’s nice to know that even if lawmakers
can’t agree on any of these solutions, we can still rely on at least a portion of our
benefits when we’re flossing to Drake in the old folks home. And that’s our two cents! Thanks to our patrons for keeping Two Cents financially healthy. Click the link in the description if you’d like to support us on Patreon. What would you like to see lawmakers do to
our social security program? Let us know in the comments…whoooaaa!

  1. The solution seems very simple to me. Get rid of the limit of $128K/year. Let those CEO's making tens of millions of dollars pay their 6%. The rich are making the laws and they like to get richer. Certainly if people making $10/hour can contribute 6%, the people making $10 million/year can also contribute 6% for the good of the nation. Edit: The 10th highest paid CEO in the U.S. was compensated $66 million last year.

  2. I'm just going to pretend I'm not going to get Social Security and work off the F.I.R.E movement and retire on my own income and investments. If I get Social Security it will be nice, but not required to live after retirement.

  3. Stop letting politicians use SS as a piggy bank! Do NOT raise my taxes. If you do, allow me an easier path to opt out of SS completely.

  4. Guys, your video quality is great, but your content is mostly wrong. FDR specifically rejected the pay as you go model. He insisted upon workers contributing to a self-sustaining system. Why? Because he didn't want us in the situation that we are in. The stockpile you talk about was created by Congress in 1977 not 1983. The 1983 reform backloaded revenue and benefit cuts. These changes have started to come online over the past decade or so. Why is it hard to raise the retirement age today – well because the retirement is current increasing from the 1983 changes.

    If you want to know why Congress does nothing, it is because the public agrees on nothing. Keep in mind that all of your myths are someone else's facts.

  5. They should eliminate the retirement checks for people above a certain income or estimated net worth. And increase the tax.

    Really the best solution would be to increase our healthspan, the amount of time you're alive and healthy enough to work. Age stopping medicine is right around the corner.

  6. Omg my finance professor was just talking about this Tuesday and was saying how what we pay now in social security is going to the ones who are retired currently

  7. Social Security needs to go away. It's a RIPOFF and all of us could get A LOT more if we invest it wisely. Like with anything, don't rely on the government to take care of you.

  8. Humans are making money complex. They keep reinvesting which makes money more tangled into the financial web. Money or more investing schemes aren't the solution for this. We need to control population and make sure the inflation does not fluctuate and easy availability of goods is must. Any kind of crisis like food, water, and extra overloaded population will take down system.
    If 1 Co. Fails that's okay but the day multiple will fail (coz the market n money is majorly connected with consumption of services) then whole system goes down n suffers. Prices n inflation is hard to keep stable coz we are reinvesting n pumping same money n promising growth to every person. This money growth starts the money trap. What you get today for 1 dollar will cost u 2 dollars n so on in the future. The wages keep increasing to cope up with increasing living expenses and no generation will ever survive happily without trouble on just social security.

  9. Love these guys. I click the thumbs up even before I see the video. I say give me a lump sum of what is mine and I will invest it. I can do better than 2.9%

  10. I don't pay into social security at all and it's great.  I pay into railroad retirement which pays out about double what ss does along with a retirement age of 60.  The down side is I pay in about 12% and my employer pays the same.  The reason RR retirement isn't short on cash like ss is our less than stellar lifespan, almost half the guys die a few years after they retire because they don't stay active, along with the higher fatality rate at work from it being a dangerous/unforgiving job.

  11. I got an idea that no one has talked about what if we put a lifetime limit say for example 125%. That means if you put in $1000 you can only draw $1250 during your retirement.

  12. Don’t depend on the government to give you money! Invest your money in real estate and stocks, start saving money in your 401K, find a side hustle to generate more income. Be smart with your money.

  13. Many poor and minority workers won’t have a good opportunity to invest in alternate retirement plans. Poor citizens are taking all the losses as the social security shrinks. This does not make me feel any better about social security.

  14. get rid of SS or make it you get back what you put in with interest. this is just an interest free loan we are giving the government. or cut the benefits of SS and only limit it to those who actually pay into the system. americans suck at saving because of this system and think that all their retirement will be taken care of by this terrible socialist system

  15. Whhhyyyyyyyy?.. 25yrs ago my father would tell me how SS wasnt even going to be around for him to take advantage of, well guess what now he is… People have been at this talking point for half a century.

  16. Modern Monetary Theory. The Federal government can fund anything it chooses to as long as the actual resources exist in the economy for those funds to purchase. Did you notice when the military budget was increased by $50 billion a year or two ago, there was no (as in none) discussion as to where the money would come from? The Federal government, as the issuer of the currency can create as much money as it chooses to. The result of doing this to excess would be inflation. Seeing any inflation yet, even with record deficits? How about addressing how the Federal government operates differently from a household, or state or local government?

  17. To save SSI they need to stop increasing it every year for inflation for a few years until it stabilizes. It's kinda like cutting the amount but with out creating panic of it being less.

  18. Inever depend on sociral securiry i find thme for others as help and its in god hand so i invest lets all of us do same

  19. No. The answer is no. We are cash cows for boomers. Little moo'ing cows getting our tits milked by all the rich boomers so they can pay off their twelve houses.

  20. I’ve always wondered why Social Security is at such a high risk for bankruptcy, but there is an infinite amount of money to spend on Welfare even though our country is trillions of dollars in debt.

  21. Just kill social security already. Instead invest in financial literacy so people learn to save for their own retirement

  22. 80% of Hispanic immigrants use one or more welfare program. Remember that next time you are worrying about social security.

  23. I'm happy to learn the government doesn't plunder social security money in America…

    Here in Brazil, the Constitution literaly states they CAN do that! And they love to raise social security taxes for completely unrelated purposes…

  24. So 9 out of 10 people are favorible of a retirement account that gets you maybe 1% return and you have no direct control over? Yeah… seems like an amazing deal to me, let's do more of that…. It is exhausting how ignorant so many people are.

  25. I understand what this video is trying to do as to quelm the worries about SS funds but all it did was in a way confirm all the fears that everyone had in the first place. That we will be getting less in SS but paying in more throughout our lives, then when it comes time to retire and the cost of living and healthcare goes through the roof our measly SS check will barely make a dent into our bills and living expenses.

    Luckily, you have many videos on investing and saving money that will come in handy 😁

  26. So wait a minute, if I take my savings and take it from one pocket and put it in the other pocket and write myself a bond with 3% interest, but I take the money out of my pocket and spend it on stupid shit, that’s being responsible ? Sign me up!

    The trust fund is an accounting fiction. That money is gone And it is really strange that this wonderful channel is falling for it.

  27. If the government learns to control spending, the trust fund can be restored. How many billions are wasted enforcing our ideas overseas?

  28. I disagree with your statements about the trust fund and that money is being "invested". Social Security is part of the Federal government. Excess funds generated by SS (part of the Federal government) are used to purchase Treasury Bonds from the Federal government. The Federal government then spends the money. Effectively, the Treasury Bonds are just an accounting of how much the Feds borrowed from SS. Its like if I gave my extra savings every year to my wife to save, she gives me a receipt of how much I gave her, and then she goes and spends the money thinking, whenever he asks for it back, I'll just borrow it from China. Just because I have a bunch of receipts saying how much I 'saved' with my wife, doesn't mean the money is actually there. The U.S. can't pay back it's debt to SS without either raising taxes on the people or just borrowing more from China.

  29. To be fair – one reason that people DON'T save more for retirement is because they are relying upon social security.

  30. Social Security saying it has a $2.9T trust fund is the exact same thing as me saying I'm a trillionaire because I owe myself $2.9T. That's a pretty sucky trust fund if you ask me.

  31. But is it dangerous to say that while yes they take our money and invest it, the vehicle or the mechanism is one that shouldn't be trusted, aka the corporate bond market. 🤷🏾‍♂️

  32. A country with 20 trillion in debt doesn't have a trust fund of 3 trillion dollars invested… It owes 17 trillion dollars.

  33. Think how big your 401k account would be if you could take 12.5 percent of your income and invest it instead of giving it to the govt.

  34. My older, lower income mother is terrified of not being able to collect after 2034 thanks to fear mongering news channels *cough cough Fox cough*. I wish this information was available to people like her. I've tried to explain it but she doesn't buy it from my mouth. It's infuriating to see people be so mislead.

  35. I work as a glorified bank teller and here's the truth based on what I see EVERYDAY. SS is shrinking drastically, payouts are becoming smaller and some don't even receive their payments anymore. They get angry when they find out there's no more money for them

  36. OR… Americans could begin saving for retirement now and not rely on Social Security? If in retirement social security is still a healthy benefit, it would just be a bonus 🤔

  37. “The good news is we still have 15 years to figure out a solution to rising life expectancies…”
    So this is why Agenda 21 calls for guillotines.

  38. I love your videos, but the reality is more grim.
    You why aren’t you accounting for inflation?!??
    Would everything cost the same in 30 years? So, if you make less and things are more that’s really bad.
    The government is “investing” on the market… well, what happens when all that stuff tumbles…? Which, as we know, it does. Boom! Gone.

  39. Raising the age for receiving retirement basically means “we are hoping you die before you can collect this money…”

    Beautiful, what a joke.

  40. Abolish it and refund us our money! Each generation should pay as they go, relying on your children and grandchildren to fund your retirement is selfish and wrong. If people dont think about the future, it's going to bite them in the butt. That's their fault, not mine. The government cant even balance the budget. Why would you want them in charge of your money for retirement?

  41. Thank you for acknowledging that only the first $128,900 of income is taxed for Social Security Insurance (though I think the actual number is $132,900). Since I have a salary lower than that, I pay into it all year. Someone Making $250K only pays the tax the first six months of the year and some CEOs probably "make" enough money that they're done paying their Social Security taxes before they even return to work on January 2nd.

    Fixing this seems so straightforward and the most commonsense way to ensure the fund's solvency and steady benefits to appropriate entitlement levels. They just need to raise the limit on the number of dollars subject to SSI/OASDI taxation (and then tie that limit to to some objective measurement about how much the fund will need to pay out over the next 5-10 years [or some other period of time] so we don't need to constantly re-adjudicate the issue).

  42. Let Social Security run out and apply UBI paid by taxing companies and value added tax. Andrew Yang's idea dosent sound to bad. People over 18 will receive $1000 a month Its nowhere near the $2861 or $1461 but if a young person invest that money early on they shouldn't have a problem retiring.

  43. we could try incentivizing reproduction. Lowering birth rates is a much bigger problem than the social security program.

  44. If the average Social Security check is $1,300, why did your graphic cut $2000 by 25-30% and show $1,600? In reality we'll receive $910 a month if nothing changes, a more alarming figure than $1,600. Plus, if you consider inflation… basically, by the time millennials retire we better not be counting on Social Security AT ALL. It'll be the equivalent of getting $300 every month and trying to live off of it.

  45. I think it'll be around but pay a lit less as the years go on. It's time everyone creates their own retirement fund. 😉

  46. Let's talk about the real problem of Social Security. People on disability drawing Social Security. People addicted to drugs actually qualify for Social Security disability – for some bizarre reason. There are so many disabled people now – which was NEVER a thing even up to the 80's and 90's, that's the REAL problem.

  47. it's all irrelevant what people want or how they feel about SSN. It needs to be abolished, yes. And yes, everyone responsible for their own retirement! That's moral. Not making others pay for your responsibility!

  48. So Social Security is a ponzi scheme? They take money from people today to pay for the ones that are retired? That's a ponzi scheme. When the current tax payers are not able to pay their taxes, the whole system will fall. Thats nice to know.

  49. The goverment never should've passed it in the first place. One of Americans the first steps towards socialism. The American people have become so accustomed to goverment aid they feel entitled to it. So don't expect it to go away

  50. Raising taxes won't solve a damn thing. This goverment we have will spend it on dumb shit like school and Medicare for all instead of solving the problem

  51. 3:13 Unfortunatelly in my country not only there isn't any trust fund, morevoer SS money from these taxes are lower than SS payments to retirees. Long live the Europe

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