An Overview On The Financial Capacity Of Social Security
By Jinky C. Mesias, Fri Dec 9th
There have been so many reports confirming the distressing stateof the finances of Social Security and so many members by noware wondering if they can really get the benefits that are dueto them when their time to claim for such benefits arises.
In spite of the financial crisis that the Social Security isfacing today, the Social Security Administration is confidentthat it can pay all benefits that are due to their members. Theyassured further that there would be no cuts on the benefits tobe received by the current retirees but rather there would be ayearly increase on the benefits due to cope with inflation.
There are also so many reforms planned to be implemented inSocial Security including those set forth by the President’sCommission that would further strengthen Social Security. Thereforms are also set to ensure that scheduled benefits,including cost of living increases for would-be retirees.Moreover, the reforms will not reduce the benefits of currentlydisabled Social Security members as well as disabledbeneficiaries.
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However, in spite of all the reforms to be made in the SocialSecurity Administration there is still the present problem interms of finances since there is a foreseen 26% reduction in thebenefits to be given for future Social Security retirees andunless the social security administration does something todiminish such problem then there would be an expected continuousreduction every year in the scheduled benefits.
The Social Security although offering retirement benefits shouldnever be considered as a sole source of income in retirement. Itis much better to have other retirement plans to further ensurethat you leave comfortably when you retire. Besides havingSocial Security as a sole income retirement option is likesitting on a one legged chair and that does not imply stability.It’s always wise to have other options in case the SocialSecurity Retirement benefit cannot fully suffice the entireneeds of the retired member.
But just how the Social Security gets its funds? The fund of theSocial Security is procured by means of the payment of the taxpayers who are paying for their own benefits. The fundcontributed by these tax payers is the one utilized for thepayment of present benefits like payment for the retirementincome of retiring members. However the excess in the fund isinvested in a special-issue treasury bonds. And this is how theSocial security earns additional funding for the next recipientsof social security benefits.
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About the author:Jinky C. Mesias is a graduate of Bachelor of Science in BusinessAdministration Major in Business Management. She is at presentan Associate Manager of a Life Insurance Corporation and afreelance writer.
