Hello, I'm Tony kenzi here and I'm welcoming you to this fourth and last lesson about social security. In lesson three, we've touched on some of the variables associated with signing up for Social Security benefits. We talked about how your benefits will be calculated the pros and cons of signing up early, and that your default decision should be to wait until you reach your full retirement age before you claim your benefits. In less than four, I'm going to share my thoughts about the future of Social Security. For Richard remain viable through your retirement years, fundamental changes are necessary, and the sooner they happen, the better. Without these changes, Social Security will turn into something far less helpful to you.

I asked you to recall the reason why Social Security came into being it was to offset the social chaos that resulted from the Great Depression. In the 80 plus years since its inception, it has evolved and become an integral part of the social contract. Each one US has with a nation we call home. I asked you to forgive me in advance if I scrape along the edges of political ideology. Like it or not, the necessary remedies are going to have to come from Congress. And the people holding the reins of power in Congress are the ones who will either cause you to benefit or cause you to suffer.

If you don't vote in the upcoming elections, your license to bitch and moan is hereby revoked. Here's what I know. For the average person in this country now receiving monthly Social Security benefits based on their work history. It represents roughly 40% of their monthly retirement income. Take that away, and we as a nation are faced with a staggering problem. You can argue that it shouldn't be this way and I won't disagree with you.

But it is what it is. And since your life is at stake, you need to be aware of the consequences. The economy of this country is to a large extent driven by our ability as citizens to buy stuff, whether it's food and shelter or luxury cars, countless millions of us have a livelihood that is a function of what the rest of us are willing to spend our money on. Remove a major source of that ability to buy and you'll have economic chaos. In 1940, for every person receiving a benefit, there were about 160 workers putting a percentage of their earned income into the system. By 2015, that ratio had shrunk to less than three workers for every beneficiary.

It is increasingly under threat from demographics, declining fertility rates and increasing life expectancies are causing the US population to age. Couple that with people living longer than ever before, and you automatically put pressure on the system. Think back to my earlier comment about watching grass grow or a car turned to rust. As you can see on this chart, the number is going down and as a result The pressure on this system is increasing. Along the way the rules have changed, and the FICA tax came into being. Right now 12.4% of earnings goes into the fund whose full name is at the bottom of this image, half or 6.2% is paid by you and the other half by your employer, unless you are self employed, which means you pay the full 12.4%.

There's also a small percentage that goes into a trust fund to support Medicare. It's time to press Congress to make some relatively painless adjustments. If we wait until the last minute, those adjustments will be painful. So depending upon how old you are today, and by extension, how long before you reach your fra, how do you want all this to play out? My immediate thought is not so much about the current baby boomer generation who are signing up by the thousands every day and their benefits, but about what happens to the next generation. Your generation Many of you taking this course are the children of the baby boomers.

That's a second larger demographic bulge following 10 to 20 years behind the baby boomers. a percentage of what you earn today in the form of payroll taxes is going into the system and it's supporting those who live and breathe in front of you. Sooner or later, you're going to want the same benefits now being paid out to your parents generation. For many reasons, my monthly benefit check far exceeds what I paid in and what you receive will be very similar. The future integrity of the Social Security system depends on the ability of the next generation to earn a living and aspire to be included in the middle class. This chart shows you that those aged 45 and up are growing as a percentage of the population.

And another thought with political implications is this by 2020. The majority of people in this country under the age of 18 will be non white citizens. And that has implications for us. We can expect the economy to continue to grow long term, but only if both children and young adults can be educated and become productive members of society. with that comes the ability to have and grow a family and to become consumers like you and I are today. Without that promise, your expectation of receiving Social Security benefits and retirement is in jeopardy.

Headlines, pundits and politicians would have you believe that Social Security net that is Social Security and Medicare is going bankrupt? That's not true. And this chart supports that. It does tell you that by 2033, checks are going to shrink by 75% of what they were in 2032. And that's not very far away. Here's what you need to know.

The rules say that how much you and everyone else pays into the system has not been changed for decades and are out of date. It's not so much the percentage we pay but the point where our need to contribute stops. There are trillions of dollars of income earned by some of us that is exempt from FICA taxes. My children now in their 40s, are rightly concerned about social security. They're not sure the benefits will be there for them. If this is a worry for you, then your roadmap toward a successful retirement demands a political solution that is in your best interest.

The last time changes were started to correct what was obviously a crisis in the making was in 1977. That was 40 years ago. Without changes by 2041. When my son is 69. The social security trust fund will be exhausted, not empty, but there will no longer be a reserve to draw upon. He and his sister are going to have to take a significant pay cut going forward.

The fix is really not that dramatic. However, the political reality That our elected representatives rarely make decisions based on something that's going to happen in the future. Long beyond the election cycle they are now in ends. Over the years, I've written over 100 blog posts that talk about what has to happen to get it right. The resource vault has a Social Security tab where you can find some of the things I've written on this topic. It's easy to allow national political rhetoric to muddy the waters about social security.

At the national level, it carries a clear mandate to care for those members of society who need help. There will always be some who abused this ideal and there will always be a debate about where the line should be drawn. One last thing about social security you should be aware of, regardless of how needy you think you might be. If you qualify for benefits. It results in a guaranteed stream of lifetime income with an annual cost of living writer for me and millions like me and maybe for you. It really represents a critical way to pay those core expenses every month.

Some years we get a raise some year, we get no raise. The annual cost of living adjustment is a function of inflation. And it applies equally to every single recipient of benefits. It's the nature of the beast that life comes to an end. And with it your monthly Social Security benefit. If you have a spouse, and both of you received a monthly benefit, the survivor is entitled to receive the larger of the two benefits for as long as they live, along with cost of living adjustments.

That's a huge deal for many millions of Americans. Even those whose Social Security checks are a small part of their retirement income. Make sure you take advantage of every opportunity. And that includes finding the right people to send to Congress to keep Social Security alive for everyone. Okay, enough of this. We've discussed retirement as a conceptual reality and how you must ask questions of yourself and our articulate your strategic goals.

We've discussed the issues associated with investing money for the future and what has to happen for you to be successful. We've just now spent time on the third leg of the stool which is Social Security. With these three legs, chances are you won't fall on your ass when you sit down. Now comes the fourth leg. This is when I bring the three legs together to get you where you want to be. And that will happen in module four.