With previous generations relying on Social Security benefits, many millennials are doubtful of the program.
What exactly is Social Security?
Social Security is the foundation of economic security for millions of Americans. The program benefits retirees, disabled persons and families of retired, disabled or deceased workers. Social Security is funded through payroll taxes managed by the government. As one of the largest federal spending programs, it is designed to keep Americans above the poverty line. According to the Social Security Administration, more than 59 million Americans received almost $870 billion in Social Security benefits in 2015.
How much can you expect?
Generations alike have expressed concerns about the Social Security program. While some see a financial safety net for retirement, others see the funds as fiscally unsustainable. In June 2016, the SSA released its annual trustees’ report, giving an inside look on their projected financial status. Based on the program’s current trajectory, the Social Security Board of Trustees estimate the Social Security trust fund could be exhausted by 2034.
If you’re looking for an estimate of your full retirement benefits, consider registering for The Social Security Administration’s Retirement Estimator. Based on your actual Social Security earnings record, the site gives you a glimpse of your payments at full retirement age.
Millennials weigh in
After years of paying into the program’s funding, many millennials expect to receive the promises of future retirements payments. Others, however, are doubtful of the program’s fate. According to a 2014 Pew Research poll, 51 percent of millennials expect no benefits from Social Security, while only 6 percent expect the full benefit of current retirees. Could their pessimism around Social Security be justified?
What should you do instead to save for retirement?
The fate of the Social Security fund is uncertain. Don’t rely on Social Security alone and start planning for your future. There are a number of things you can do to put yourself in a better financial position for retirement.
Of course, the most obvious decision is to start saving money regularly. While this could be in your credit union’s savings or Money Market accounts, investing in a retirement account could grow your money faster and it offers tax benefits (See your tax advisor for details).
Also, you can check to see if your employer offers any retirement programs, including a 401k program. By participating in a company-sponsored retirement plan, your money can grow steadily, which is the key to any long-term retirement fund. Plus, you can allocate a percentage of each paycheck into retirement savings. Even the smallest amount will pay off later.
No matter your age, now is a good time to take stock – and take action – on retirement planning. While no one knows for sure what the Social Security program will look like when you retire, we do know that the sooner you start planning your savings, the better.
Travis Credit Union can help you reach your savings goals faster. We offer Traditional, ROTH and Simplified Employee Pension Individual Retirement Accounts. These no-fee accounts allow you to take advantage of both long-term compounding and tax-deferred earnings growth.
Visit a branch or call (800) 877-8328 during normal business hours to learn how you can open your IRA account today.
Social Security Administration Annual Trustees’ Report Retirement Estimator 2014 Pew Research Poll
Pew Research, US News, Social Security Administration, NASI