In the event the government cut all support for retirees, could you survive without Social Security or Medicare? The golden years are supposed to be a time for relaxation and enjoyment, but with Social Security’s bleak outlook, some may be wondering if it is possible to get by without it. The answer is -maybe.
Since it was first established, politicians have heartily debated Social Security. The funding for Social Security is often called a “trust fund.” In reality, it operates more like a short term loan. The taxes of today’s workers go right to the checks of today’s retirees.
Most conservative politicians think that Americans could, and should, develop the personal responsibility to prepare for their future needs without aid from the government. That conversation has continued with renewed energy due to the inflated national debt and deficit.
According to the Wall Street Journal, ten years ago the national debt was about $3.5 trillion. By 2020, Congressional Budget Office calculations suggest it could be well over $20 trillion.
Social Security is a lifetime income annuity. It sends you a check every month until you die. That one feature deals with the biggest financial challenge any retiree faces—making sure you don’t outlive your savings, even by one year.
According to the most recent survey by the Employee Benefits Research Institute, fewer than half of workers have even saved $25,000, and only a third have saved as much as $50,000. Forty-four percent have saved less than $10,000, and a quarter have basically saved nothing at all.
In order to decide what you would need to save in a retirement world where the fountain of Social Security has run dry, you need to find out what you need to live on and what share would usually be funded by Social Security and Medicare.
The average social security recipient gets about $14,000 a year from the Social Security fund. In order to retire without social security, a retiree needs a way to guarantee income. Men who retire at 65 years old need an average of 17 years of income and women need an average of 20 years.
In order to keep a standard of living similar to Social Security and account for 3 percent inflation, you would need to save about $300,000.
An annuity is a type of investment in which you put in payments for a certain amount of time, or pay one large amount of money. In return, you will receive payments at regular intervals sometime later down the road.
Purchasing an annuity that will yield roughly the same amount costs about $200,000 — though it is not backed by the federal government and could fail.
If you have applied for Social Security disability or Supplemental Security Income benefits because you are unable to work, the South Carolina disability lawyers at Strom Law are dedicated to helping you receive the disability benefits that you deserve.
