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While planning for retirement, most Americans immediately think of Social Security. But is Social Security something we can rely on? Statistics show as the baby boomer generation ages out of the workforce and into retirement, a rapidly increasing ratio of taxpaying workers to Social Security recipients is unhinging the reliability of Social Security as a central form of retirement funds. Because Social Security is funded by current payroll taxes, not by the savings of taxes paid by current beneficiaries when they were working, this demographic shift will mean that senior citizens across the country will have far less funds to live on than previously anticipated.

In order to properly plan for our retirement future, we have to understand the source of the problem. According to the Social Security administration, Social Security and Medicare expenditures in 2014 totaled 8.5% of gross domestic product. The SSA projects that this figure will inflate to 11.4% by 2035, which happens to be when the youngest set of baby boomers will enter their seventies and become beneficiaries. These figures tell us that the aggregate cost of ensuring that retirees are fairly compensated with increase within the next two decades, but there are even more stellar figures to show us the individual cost of this demographic shift.

In 1950, there were 16.5 workers to every one Social Security beneficiary. Because the baby boomers generation, which consists of Americans born from 1946-1962, is so much larger than younger generations, the ratio of those receiving Social Security benefits to those paying into it has plummeted to below 1:3. Even at a cursory glance, we can easily see that it is neither feasible nor possible for three working Americans to be taxed enough to properly fund a senior citizen who may have spent an entire lifetime paying into Social Security.

Even the most ardent defenders of Social Security admit that beneficiaries will receive less than 75 percent of all promised benefits after 2033. Vice News reports that thirty year olds in 2015 will receive a 1.5 percent return on what they pay into the system. To put it simply, both people who are about to entire retirement and those who are just entering the workforce cannot fully rely on Social Security to cover their expenses of living.

Now baby boomers and people planning for retirement must face the facts and plan for the future. In our rapidly changing economy, it is easy to be overwhelmed by the rate at which the reliability of different means of saving are changing, but we believe that the uncertain future can be navigated and all senior citizens can have fair incomes upon retirement with proper independent planning.

Learn more about how you can prepare here.

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