Retirement Blog

Finance Blogs » Retirement » Fix Social Security now

Fix Social Security now

By Jennie L. Phipps · Bankrate.com
Thursday, January 27, 2011
Posted: 4 pm ET

If you're like me, you're nosy about how your retirement planning is going compared to how the neighbors are doing. For us financial voyeurs, the Center for Economic and Policy Research today released a calculator that provides that information.

You plug in your planned date of retirement, current income, estimated mortgage and other debt, savings, stocks and pension to calculate future household retirement income. Then you adjust the demographic information -- age, race and marital status -- and the calculator kicks out how your predicted retirement income, including Social Security payments, compares to similar households in your area.

In my Detroit-area neighborhood, there are a number of families whose retirement plans have been changed a great deal by the slowdown in the automotive industry, the resulting cutbacks in other businesses and the crash in home prices. The people across the street from me gave up on the idea of selling their home and building a new one on Lake Huron. The neighbor to our left went back to work after her husband was forced to take early retirement. The neighbors to our right abandoned the idea of selling their home and moving to Florida because they lost their employer-paid retiree health care and were fearful what that might mean in an unfamiliar area far from family.

Granted, none of these people faced financial calamities, but their sense of security was shaken. What is happening to Social Security doesn't make them feel any better.

On Wednesday, the nonpartisan Congressional Budget Office said Social Security will collect $45 billion less in payroll taxes this year than it pays out in retirement, disability and survivor benefits. If you add in the one-year 2 percent cut in payroll taxes, the shortfall rises to $130 billion -- although Congress has committed to repaying any revenue lost from that tax cut.

Clearly, a long-term fix for Social Security has to be in the cards. President Barack Obama confirmed that but made no commitments during Tuesday's State of the Union address. That leaves all of us who thought we knew what Social Security would pay us wondering -- and uncertainty is always painful.

It's time for our government to demonstrate a little chutzpah and get whatever changes they're going to make in this vital program behind us, so those of us who by virtue of our age will feel the pain first can deal with it and get on with living. If we're going to have to get by on less Social Security, I'd rather know it now instead of later.

--

Want the experts to help you with your retirement planning ... for free? Join Bankrate's Dr. Don and Kay Bell for a Retirement Reality live chat at 2 p.m. EST, Monday, Jan. 31. They'll take on your toughest questions. Mark your calendar and  sign up for an event reminder today!

«
»
Bankrate wants to hear from you and encourages comments. We ask that you stay on topic, respect other people's opinions, and avoid profanity, offensive statements, and illegal content. Please keep in mind that we reserve the right to (but are not obligated to) edit or delete your comments. Please avoid posting private or confidential information, and also keep in mind that anything you post may be disclosed, published, transmitted or reused.

By submitting a post, you agree to be bound by Bankrate's terms of use. Please refer to Bankrate's privacy policy for more information regarding Bankrate's privacy practices.
2 Comments
Martin
January 29, 2011 at 3:35 pm

We can fix this problem real quick... Put all Government in the same system, senate,congress and all employees.. they will have it fixed in no time at all.. It is what should have been done long ago.

End the Ponzi Scheme
January 28, 2011 at 10:03 am

It'll never happen, but reverting the program to what it was initially sold as would work.

You actuarially are dead before being able to collect. (Hint 76 for males, 80 for females)
You are at subsistence level from the payment. (Hint $11,000 for 1, $15,000 for 2)