The New Commonsense Guide to Your 401(k): Rebuilding Your Portfolio From The Bottom up

Chapter 7. Will You Get Anything from Social Security?

THE SOCIAL SECURITY SYSTEM is in deep trouble. Good financial advisors are telling clients to start viewing Social Security as a subsidy for lower-income individuals rather than a benefit that we will all collect. One planner tells me: "You may get something, but you probably won't get it until age seventy, and it won't be worth what you think it will be worth."

Social Security income has never been adequate to provide for a comfortable retirement. But for many of today's retirees, it provides a reasonable base. Even that is changing. And it will change rapidly as the baby boomers begin to retire this year. If the system were to continue as it is today, it is expected to start paying out more each year in benefits than it collects in taxes after 2012. Sure there are economists and other "experts" who still argue that Social Security is just bent a little bit and that it will right itself. That isn't going to happen. So don't you be in the group counting on this bubble to keep growing.

Changing demographics are straining the system. When the first Social Security checks were mailed out in 1937, more than forty workers were paying withholding taxes to support each retiree. Today just three workers support each retiree. And that will drop to two workers per retiree by the year 2030.

Americans are living much longer, too. When the system was set up in the 1930s, few people lived long enough to collect Social Security. In contrast, ...