Good Morning DINKS. My 31st birthday is quickly approaching (October 9th) and that means that I am soon to be one year older, and soon to be one year closer to retirement. If you have been working since you were 16 years old like I have been, then you have also been contributing into our Social Security fund, just as I have been doing for the last 15 years. I am all about a sustainable economy and I think the idea of a federal pension plan is great if it can be self sustainable, but there is no guarantee that Social Security will be around for me when I am ready to retire…whenever that will be. As a 30 year old (soon to be 31 year old) professional I have to plans to retire anytime soon because there are still so many more things that I want to do in my career; however the idea that I will be contributing into a fund for (maybe) 45 years and there is a possibility that I will get nothing out of it in return really bothers me.
Should Social Security be Optional?
I don’t mind contributing into a Pension Plan or a Retirement Savings Plan during my working career as long as I am able to enjoy the fruits of my labour during retirement. If our Social Security fund may be bone dry by the time we retire, should we still be obligated to contribute? I feel that the answer is No. Social Security should be an optional savings plan for people who don’t have the option of contributing to a Pension Plan through their employer. The idea that younger generations of workers are contributing into Social Security in order to fund the retirement of a previous generation is very unsettling. There is no guarantee that the number of contributing younger workers will be enough to sustain Social Security for the older generations.
Maybe the Federal Government should act as a hybrid between a Financial Institution and an Employer when it comes to Social Security. Our personal contributions to Social Security should be held in an individual account for us which will be able to be withdrawn at retirement for personal use. During our working careers the Federal Government should match our Social Security contributions which would be prorated based on our annual salary each year. This would give workers an incentive to save for our own retirement, and it would guarantee our own personal savings upon retirement. This way we wouldn’t have to depend on a younger generation to fund our retirement.
We Have Other Retirement Saving Options!
As a Financial Planner when I prepare Financial Plans for my clients we always consider Social Security as part of their retirement income. Actually, we plan for Social Security to be the clients primary source of retirement income and we supplement their retirement needs with their own individual savings. But the truth is that this may not be a reality for many young workers today. Personally I am planning for my own retirement by saving through my employer Pension Plan as well as an individual Retirement Savings Plan. If Social Security is available for me at retirement it will be the gravy on top of my french fries, it won’t be the potato.
Some people say that if you want something done right we have have to do it ourselves; the exact same rule is true when it comes to our retirement. It is important to always have individual savings for our retirement because it is very risky to count on someone else to save for our retirement. Take a moment and think of the worst case scenario, imagine that you have absolutely no savings when you retire and that Social Security is not available for you in retirement. What would you do?
Retirement Savings don’t always have to be in a Roth IRA or a 401k, retirement savings can be in the form of any type of investment account. As long as we are saving for our own retirement we will be ok.
Photo by angela7dreams