Is Social Security Sustainable for My Retirement Plan and Your Retirement Plan?

Is Social Security sustainable enough to include it as a major part of your retirement plan and my retirement plan? Probably not. I certainly won't count heavily on any government programs such as Social Security in my retirement plan.

The U.S. federal government already spends $26,000 per year for every American retiree (anyone over 65). Almost half of the American federal budget today is accounted for by and Social Security, Medicare, and Medicaid. If nothing changes, (unlikely, of courese) these three programs will consume more than 100 per cent of the U.S. budget in 25 years.

PIMCO CEO Bill Gross in an article called Skunked states that the U.S. situation is much worse when one includes the unfunded liabilities of Social Security ($8 trillion), Medicare ($22.8 trillion) and Medicaid ($35.8 trillion).

What's more, Silicon Valley venture capitalist Mary Meeker calculated the balance sheet for the country of USA as if it was a company, and estimated that America Inc. presently has a negative net worth of $35 trillion to $40 trillion.

Clearly, this is definitely unsustainable. No doubt there will be major cuts to American social programs along with significant tax increases.

Social Security may still be there twenty years from now but the writing is on the wall. It will be severely reduced. There will be a major restructuring of the American programs including Social Security simply because the system can't afford all the debt:

Here are some retirement quotes about Social Security and money to place things in proper perspective so that your retirement plan and my retirement plan make more sense:

If you are thinking that government will take care of you [in retirement or otherwise], prepare for a rude awakening — government is planning on your taking
care of it.
— Jon Hanson

There are seven sins in the world: Wealth without work, Pleasure without conscience, Knowledge without character, Commerce without morality, Science without humanity, Worship without sacrifice and politics without principle.
— Mahatma Gandhi

If you want to retire happy, great health is important. The foundation for all happiness lies in health. Physical, mental, or spiritual health — you must use it or lose it!
— from How to Retire Happy, Wild, and Free

May you always have work for your hands to do.
May your pockets hold always a coin or two.
May the sun shine bright on your windowpane.
May the rainbow be certain to follow each rain.
May the hand of a friend always be near you.
And may God fill your heart with gladness to cheer you.
— Irish Retirement Blessing

If you want to be truly prosperous, forget about keeping up with the Joneses. Their prosperity is a facade. They are broke — and in debt big time!
— from the book Zen I Got Rich by Ernie Zelinski

Reflect upon your present blessings, of which every man has many — not on your past misfortunes, of which all men have some.
— Charles Dickens

"The book [The Joy of Not Working] should be "must" reading for
every pre-retiree who dreads the thought of boredom and inactivity in retirement."
— Retirement Planning Journal, (Published by International Society of Retirement Planners)

For more retirement quotes see: Sensational Retirement Quotes for Smart People

The New Retirement Ain't Going to Be as Good as The Old Retirement

Living smart in retirement may not be as easy as it appears to some, given the plight of many Americans' retirement plans.

In fact, the new retirement ain't going to be as good as the old retirement.

Saving money tips may not be enough to get people to save for retirement given that a lot of Americans are just struggling just to get by.

In November 2010 AARP released a survey about New Yorkers’ perceptions of Social Security and what role Social Security should play in future retirement planning. (As Ernie Zelinski wrote, Social Security is a secure way to find great pleasure in being terribly deceived.)

Forty-one percent of New York residents as compared to 39 percent of Americans nationally, stated that the protection of Social Security as a source of retirement income was the most pressing issue facing the U.S. except the creation of jobs.

Other national issues were addressed including taxes, deficit reduction, health care, immigration and energy.

The retirement survey also found that:

• 19 percent of New Yorkers say they are very confident they will have enough retirement income to live comfortably.
  
• Eighty nine percent of New Yorkers believe that Social Security is highly important to their retirement income.
  
• Most seniors in New York rely on Social Security and would struggle without it.
  
• Sixty-three percent of New Yorkers would either not be able to afford basics or would have to make significant sacrifices.
  
• Fifty nine percent (59%) of New Yorkers agree that the average Social Security check of about $1200/month is too low.

At the same time, another retirement study conducted by Protect Seniors.Org found that the vast majority of American retirees predict that their children and grandchildren won't be unable to participate in the "American Dream" and afford retirement.

Almost three quarters of poll participants said that they expect their children and grandchildren to have worse career and lifestyle opportunities than they enjoyed.

Over 65 percent of the American respondents replied no when asked if they thought their children will be able to afford to retire.

Over 70 percent of the Americans surveyed said that they doubt that their grandchildren will be able to afford a comfortable retirement.

"This is a real tragedy," said Dr. Mackell, former Chairman of the Richmond Federal Reserve Bank, who was involved in the study. "In the past it was a given that children would enjoy better career and lifestyle opportunities than their parents. That chapter in American life appears to be ending."

In short, you may want to recalculate your retirement number if you want to retire comfortably.

Most American workers are worried that their retirement savings won’t last the rest of their life. Only 40 percent of current workers say they will have enough money to finance a 25-year of retirement, according to a 2010 Towers Watson survey of 3,099 full time employees in the private sector. Just 62 percent of the survey respondents think their retirement savings will last even 15 years.

Take the Retirement Survey at Retirment Wisdom That You Won't Receive from Your Financial Advisor Blog.

Retirement Planning Idiocy at Its Best

A poll in late 2007 showed that 80 percent of Americans believed their standard of living would go up after they stopped working, even if they decided to retire early.

So many Americans believed in this illusion despite the fact that some 40 percent of Americans had saved absolutely nothing for retirement.

Talk about a stupid retirement plan.

Contrast this to 2008, when the recession and market downturn hit. Then 63 percent of Americans said they had given up on the idea of retirement altogether.

While that finding was interesting, in April 2010 the Employee Benefits Research Institute's (EBRI) Retirement Confidence Survey last found that this percentage had jumped to 70 percent.

Interesting. It appears that more Americans are starting to face reality and realize that it takes at least a bit of money to be retired.

On another note, this was an unusual letter titled Retirees owe it to their kids to ease U.S. debt to the editor of the Washington Post regarding the Social Security System in the U.S.:

Why shouldn't retirees expect some reduction in Social Security and Medicare benefits, and soon? Before we retired, or will retire, we lived beyond our means by voting for those congressmen who would keep taxes low and borrow from the trust funds to pay government bills. Woe to the politician who would ask us to fully pay the taxes necessary for the services we expected from government.

This large accumulated debt to the funds is coming due. So we have an obligation to help pay it off by accepting less from them or paying higher taxes on our retirement income. As retirees, we have no right to just pass our debt off on our kids. We certainly helped create it and should help pay it off.

Werner Gruhl, Columbia

For an interesting on article on Social Security by Ernie Zelinski see:

“Social Security Is a Secure Way to Find Great Pleasue in Being Terribly Deceived”

Here are some Sensational Quotes about retirement:

Money is what you make it. Depending upon who you are — and your frame of mind — money can be anything you want it to be. Money can be: the root of all evil; or that which answers all things; or something that burns a hole in your pocket; or a means to freedom; or an interesting concept; or even a stupid concept. Whatever value you place on money, you must take responsibility for it. If money is evil to you, you created it being evil. If money is a problem to you, you created it being a problem. If money is joy to you, you created this concept. Take responsibility for your concepts. And be clear that these are just concepts. Nothing more and nothing less.
— from The Lazy Person's Guide to Success

"It [retirement] was absolutely boring. You can't go and say, 'I'm retired now.
That's it!' It won't take long and you're really gone for good and someone
throws the last shovel of dirt on a coffin with your name on it.
That's the moment you're really retiring — when you die."
— Ozzy Osbourne

"I personally am taking my retirement savings seriously and have by living very frugally been able to increase my savings to 60 percent of my gross earnings. I’m targeting a very early retirement. Achieving this high rate has been partly achieved by watching my Lifestyle Creep as you identify in Point 5. As I achieve pay increases I have actively decided not to change my standard of living."
— Comment on an article about retirement planning

Webster’s Dictionary defines retirement as “withdrawal from active engagement in one’s occupation or profession.” It is in fact much more.
— LYNN ANDERSON, Kansas Senior Press Service