Is an Additional Retirement Plan Needed Aside from Social Security?
The most estimable matter that anybody can do is offer an
opinion on the financial competence of the Social Security system. As of now, those who are already receiving
benefits will be covered to the extent of the government's capacity.
The potential problems for them are twofold: first off,
inflation can easily devaluate any fixed income retirement plan. Social
Security has a built-in cost-of-living adjuster, but any extended inflationary
cycle would almost certainly involve necessary modification. This can happen if
the government is deficient in funds to override double-digit inflation.
Second, the trend in Congress is aimed at shifting costs, such as Medicare, to
the recipients and taxing benefits at a later date. Either of these can create
mayhem when you're living on a limited income.
If a married retired couple will both be living off on
retirement benefits, and one faces death, the survivor may have to deal with
inadequate income to fund the daily needs. It would be best to have another
income source, such as a part time job and formulate a savings plan that could
eventually provide extra income outside of Social Security.
For younger workers just getting into the system, the future
of Social Security cannot be fully depended upon. If there will be fewer new workers
contributing to the system, and recipients are living longer, this would cause
a big problem if not remedied by the government. It is almost certain that retirement ages
will be pushed back, and benefits will be cut down beyond in a few decades from
now. In 1935 the system started with seventeen contributors for each
recipient. By 1980 it was seven to one, by the year 2000 about four to one. If
this trend stays, by 2025 there will be only two contributors for every
recipient. The worse that could happen
is that, the system will be bankrupt earlier than expected. It is just sensible
for anyone to have an alternate retirement plan.
© 2011 Athena Goodlight
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