Retirement is closer for some than others. No matter your age though, if you’re working, you’re probably thinking about it.
When it comes to Social Security, millennials are extremely skeptical. In fact, 80% don’t expect to get anything out of it, despite currently paying into it.
The future of social security
There’s no doubt the program has faced its financial challenges, but despite the rumors, it’s not going broke. There’s no indication it won’t be able to pay any benefits to millennials when they need it, but whether they face a reduction in benefits is another issue. That’s because this year Social Security will start using trust funds to supply benefits due to the lack of incoming revenue. So, in a way, it’s like using savings to keep up with bills. Eventually the funds will run out and Congress will have to step in.
Future projections and what to expect
According to projections, those funds will run out of money around 2034, meaning millennials won’t be fully covered. However, what is important to understand is that most of the funding is from payroll tax revenue. So, as long as there is a workforce, the program will pay out some form of benefits.
The situation isn’t as dire as most millennials see it. There’s hope for some benefits, but the speculated amount is unknown.
The safest bet? Save now!
The best thing to do now is to prepare yourself. Contribute to a 401(k) and start investing. Save more now during your working years, regardless of where the program is heading or what you expect to get from it when you retire.
Feature Image: Twenty20