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“I Have No Choice” But to Keep Working There’s no doubt that the Social Security benefits that hard-working Americans have paid into for decades are under incredible pressure. If nothing is done except “kicking the can down the road,” by 2035 retirement savers won’t be able to count on the entire benefit they’re entitled to. Thankfully, Social Security isn’t expected to be an investment, or there would likely be a much nastier discussion on top of the one we’re already having. The reality is already nasty enough. “I have no choice” but to keep working For example, Nancy Reynolds, a 74-year-old “retiree” has to keep working as a Wal-Mart cashier just to stay afloat. She’s quoted by The Guardian:
Another American, unable to work due to a chronic illness, was ready to pull up stakes: “Moving abroad to a country with a lower cost of living was my only realistic option to survive,” concluded 49-year-old Rocky Giammatteo. He receives Social Security disability benefits because his multiple sclerosis diagnosis makes most forms of work impossible for him. “The nation is really facing a retirement income crisis, where too many people aren’t going to be able to retire and maintain savings to live on,” said Nancy Altman, president of Social Security Works. Keep in mind, if you make more than $25,000 annually ($32k married filing jointly), then your Social Security benefits are taxed, so people in Reynolds’ situation have limited income options. Even if they can find a job paying over $12.50 or so an hour, taking it might actually cost them money. (Even more, if working poses any sort of health challenge.) Individual, real-world challenges like these look even worse when you consider the already dire financial challenges that Social Security is facing by 2034 (or earlier). Michael A. Peterson, CEO of the Peterson Foundation, made an alarming statement about the overall state of Social Security in 2019:
As we’ve reported frequently, things haven’t improved in the last two years. Hopefully leaders can figure out a viable solution to the huge Social Security problem that doesn’t involve taxing workers to death or raising the retirement age much higher. In fact, an outside consultant might, after reviewing the current state of Social Security, just throw up her hands and recommend we start over… Why we can’t give up on a failing system It would be more than challenging to scrap Social Security to move forward with another idea. Fully 97% of elderly either already rely on it (or will). If nothing is done to rescue the program’s main benefit — the replacement of income — then that replacement rate will inevitably decline because full retirement age is already scheduled to rise:
Elderly folks who are already having trouble trying to replace the other 60% of their annual income would see even the smallest drop in Social Security benefits as a financial catastrophe. In addition, for millions of elderly people Social Security benefits are all that keep them out of poverty. According to the Center on Budget and Policy Priorities report:
Let’s be very clear: no one should rely on Social Security alone. But if nine out of every ten seniors already is, something has to change. For now, those changes to the program are for lawmakers to figure out. Let’s focus on what we individual Americans can control: our own financial plans, and possibly a Plan B… Don’t stand on a rug that may be yanked out from under you While lawmakers and other bureaucrats try to hash out their plans to save Social Security from annihilation, and our impoverished elders from destitution, keep this in mind: Inflation will likely outpace cost of living adjustments for the foreseeable future. That’s likely to be the case no matter how high the 2022 COLA turns out to be. It also doesn’t account for any differences between the Fed’s preferred inflation metric and the day-to-day inflation you see eating up your income. So when you’re preparing your personal financial plan, consider diversification into assets that hold up well against inflation, for spending power the Federal Reserve can’t steal. (No matter how wildly inaccurate their inflation metric underestimates your personal cost of living.) Physical precious metals could be part of your diversification plan. That way, when you need money, you can have confidence that the “store of value” gold and silver provide will be sheltered from the ravages of inflation. As Mark Twain famously put it:
If you share that concern, owning physical gold might be the safe haven you’ve been looking for.
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