America is Financially Screwed (How To Save Yourself)
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THE SOCIAL SECURITY CRISIS:
Social Security is funded through payroll tax, at a total rate of 12.4% – and as you get older, you draw from a Social Security Fund to pay through retirement / supplement your income.
However, it’s said that, without any changes – “the social security fund is slated to be drained by 2033, which would result in an automatic 21% cut to beneficiaries' monthly checks, regardless of marital or income status.” To make matters worse, it’s reported that “Older people are expected to outnumber children for the first time in U.S. history by 2034. There will be fewer workers to support each retiree in the future as a result.”
Essentially, we don’t have enough workers paying into social security to fund the full benefits of the baby boomers, which theoretically means that everyone else gets less.
THE ISSUE:
If nothing is done, we could see one of the following:
-One: Social Security Benefits will be reduced by the time all of us retire (most likely to the tune of 21-25%)
-Two: They Increase The Retirement Age So That They Can Pay Out Less Money (for example, instead of taking social security payments at 67 years old, perhaps it’s only available for those who are over the age of 72)
-Three: The Government Increases Taxes To Pay For Higher Expenses.
THE SOLUTION:
I hate to say it, but – REALISTICALLY – in order to keep Social Security fully funded, that’s most likely going to mean higher taxes in the near future, AND /OR a delayed retirement age so that fewer people can draw on those reserves.
At the end of the day, though: NO, I don’t think Social Security is going anyway anytime soon – and, if I’m giving my own prediction – I’d say you should be prepared to eventually pay higher taxes while they raise the retirement age another few years.
Again, all of this should serve as a reminder that – even though the government is there – you will go MUCH FURTHER by saving and investing on your own, living below your means – and, no matter what – hitting the like button and subscribing if you haven’t done that already.
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I’m fine i just learned from graham over the years. Buy stocks and use high yield savings, be tax advantaged if possible and rinse repeat. Nothing to worry about. Networth currently is 10x vs when I first started watching graham years ago!
Wait, what, I’m paying for a road I never drive on? Where is this road. I want to go drive on it and get my money’s worth.
😮
There are a lot of short-sighted people here who just don’t understand what it takes to have a 1st world country. We are never going to get 100% out of what we put in. It’s like a car. You put gas in your car to take you from A to B, but car engines are not efficient; in fact, they only get about 20% power output from all their gets put in; the rest is waste. Are you not going to drive now because of this? No, people are still driving because the ends justify the means
It’s a ponzi scheme. As you noted it should have been earmarked accounts designated for each citizen. As it stands it’s a pension system for pensioners who either overpay or underpay into their pensions. Terrible policy creation.
Not exactly. You’re paid according to. adjusted earnings for inflation, taking the 35 highest-earning years of a person’s career and Averaging those earnings. The SSA calculates a person’s PIA by applying a formula to their AIME. The formula breaks down a person’s average monthly wage into three parts:
90% of the first $1,174 of their AIME
32% of any amount over $1,174 up to $7,078
15% of any amount over $7,078.
@@ricardoconqueso It’s not communism? Do tell!
You ignore the disability side of the program. It’s an insurance program so look at it that way; as Graham properly explained in the video. No one knows how long they can work or how long they will live. The government also sponsors investment vehicles (IRAs, 401k, etc) that you are welcome to participate in.
So once again, the advice is to invest consistently in broad index funds and hold long-term. It truly is the way. And may I add, the more boring the index, the better, haha. Thanks for another great video, Graham! I have watched all your stuff as I have started to build my own wealth since like 2018. I was even able to buy a house a bit ago by myself.
Fun fact, if the government collected the money you pay into social security and invested it for you, you’d make WAY more money.
Yep – I cover the comparison towards the end. You’d have roughly 2-3x more money in retirement if you invested it yourself.
Libs have a fit if you mention trying to do away with it. I’d rather cut my losses at this point and just keep my money from this point on and invest it myself. It might be cool to make it voluntary to opt out and maybe get some tax benefits to recoup the money already put in
that’s not a fun fact, that’s a sad fact LOL
Social security is a pyramid scheme
Definition of a Ponzie Scheme. Am I wrong?
I would like to opt-out of Social Security and just invest the money myself!
Most of us would probably take that deal
I’m curious, what would you do about seniors that made a poor investment choice and had no money at 65. Let them starve? Or die of cancer because they can’t afford healthcare? Frankly, most people are probably not savvy enough to invest in their own over a 40 year period. And, my question is sincere, not meant to be smartass.
@@KristopherHesson i mean the same thing we should do about people before 65, if you end up homeless thats on you. you have to cut off a welfare state at some point. fact is more the goverment is involved the worst it ends up EVERY SINGLE TIME. so get them out of it, and im sure theyre would end up even less homeless at 65.
plus, ss doesnt pay particularly well, and it doesnt have a maximum income that it pays out to. rich can draw from it same as the poor. so its just a straight up bad solution, thats been abused for decades
100% this.
Churches, who own billions of dollars tax free, should take care of the poor. (The mormon church has 250 billion dollars, FYI).
@KristopherHesson
Easy fix: Remove the Social Security tax cap.
that’s one way to fix it!
While that doesn’t solve all of the problem, it does solve 70% of it and I’m kinda stunned this hasn’t been done decades ago. Actually, I’m not stunned. It’s a tax and no politician wants to be known as raising taxes, so it’s no surprised they kicked the can down the road.
I’d also add that 10% of the money should be invested in the market, specifically, the S&P 500 Index, which has always given 10% rates of return no matter what 30 year block of time you look at. We can aim for a 4% rate of return, instead of the paltry 2.4% we get now.
I’d also progressively increase the tax by maybe 0.25% for every $100K you make over $300K and cap the increase at maybe a million. We could play with the numbers. Right now, it’s 6.2%. I’d argue that a person bringing in a million a year can handle, I don’t know, 7.5%. Again, we can fiddle with the numbers.
@@dontbanmebrodontbanme5403 We have super-wealthy oligarchs in power. Do you think they’ll allow this?
and set a max benefit!
this is the answer
Enjoy life, the one thing that you cannot buy is time. Invest in yourself and add value to the world and you will never have to worry about money.
The world is dying. All of it. Eventually, the sun will run out of fuel, expand and swallow us all, but we will most certainly destroy ourselves before then. Nothing is permanent, nothing you do here matters. You cannot add value to a sinking ship.
Cute sentiment, though. Fairy tales are cute.
@@Prolific_Trollbooooooooooo
@@Prolific_Trollprolific
Thank you for helping to educate people in raising awareness for financial literacy you do really good work and I recommend your channel all the time
I don’t count social insecurity in my retirement. Im doing my own saving
I’m saving, but I absolutely count social security. Afterall, I’ve been paying into it for years.
@@TheFirstRealChewy So have I, but that doesn’t mean it’s going to be there. And if it is, it may be just a token amount to keep the masses quiet.
They will come for your savings as well
Relying on the government to save you is the worst plan. It’s not even enough money to survive .
Saaaame!
They already mentioned they’re increasing social security tax next year. Squeezing more money out of Americans. Thanks!
You know Trump is removing social security tax….. right??
@@xrp_millionaire You know Trump is removing the tax on social security benefits not removing social security tax….. right??
No they didn’t. The rates remain 6.2% for next year. Only the cap is increasing to $176,100, which many of us do not even come close to making.
@@xrp_millionaireThat’s not what he’s proposing. He proposed that there be no taxation on social security benefits collected by seniors.
@@xrp_millionaire I know he’s trying to get rid of tax for overtime
I think it’s important to note that the only reason tax increases have to be bad is for decades we saw this issue coming and never address it. The best way to fix this is always to tackle it as early as possible.
Neither party wants to be the one to raise taxes or extend retirement age. It will happen after the latest possible chance.
@@theo-avl There is only one party that refuses to increase taxes and continues to give more and more tax cuts…without any real cuts in expenses. Shouldn’t be hard to figure it out.
Hang on, I’m waiting for Elon to come back from the future with a time machine, so we can go back and make social security suck a little less.
Having more people paying taxes would help the situation. Grabbing those who have lived here for years and sending them south is counter-productive. I wish more of my fellow R’s would understand this.
@@FLPhotoCatcher they’ve not been given permission to understand this.
Or, hear me out… We tell the government to manage our taxes more efficiently. Billions are just “lost” every year, more taxation isn’t the answer
This is true, we have an $800bn military budget but the Pentagon and MIC In general can’t even provide receipts, where’s our money going exactly
People complain about failed audits but then want to defund the audit and oversight services, which is what crooks want us to do…”Why are we bringing in so little in tax revenue? We should defund the IRS” is the same energy as “I saw crime, so we should defund the police.”
You’re ALMOST there. You’re asking thieves to be more responsible about their stealing.
Hopefully the new Department of Government Efficiency will make this happen.
Not necessarily “more taxation” but fair taxation would help. Social security is taxed up to 168k, that means someone making 50k pays more social security than someone making 500k as a % of their income, that’s bs
No one is retiring in America!! We’re all saving our money and leaving by 50 to go somewhere more affordable and live modestly off of what we have saved!
where do you plan on going? i am always curious to hear people’s destinations
Where to brother
Belize
I’m 38 and I DREAM of the day I become an expat.
That’s great that you would abandon your country. There are other ways. Aside from that, Going to retire in other countries doesn’t quite always workout as you hoped.😮
While working in a corporate position I did the math and learned I would not be able to retire until I was 74 years old. 401K and Social Security are not what they used to be. I decided to go for the government sector. No more SSN payments, and I get a pension to look forward to when I retire at 100% at 62 years old. A much better situation. Government is not for everyone, but should be considered for those who were in the same situation as I was.
What math did you do? No promotions or pay increases for 30 years? What would you need in 401k at 74?
And WTF is a SSN payment? You still pay into social security if you work for the government 🤦♂️
@@leok7193If any math has you retired at 74 from the start of a career please get math help. Once you’re committed to a serious retirement plan many can pull it off in 10 years 15 realistically and 20 in bad cases
One note about car insurance: law abiding people who carry car insurance also carry “uninsured motorist”. So basically you are paying the premium for the deadbeat who is going to hit you.
So I, as a millennial, have been paying my social security taxes my entire life, and the system likely will not even be in place by the time I retire. Great!
This isn’t new information dude we’ve known all this information since before 2008 anyone who has said otherwise was lying to you kinda like the people who said going to college would get you a good job
This is why you learn how to never pay taxes lol
It will continue to be there, most folks demand it, to what extent and how much you will get paid out will depend on various factors!
It will still be there, it just won’t pay as much as it does currently, or you will be taxed more to keep up with payouts, and you may have to file later in life or full retirement will be pushed out. It won’t change until it reaches critical mass. Politicians are deathly afraid to discuss the issue or take any action because it will end their career.
Elect a bunch of people who aren’t concerned about being a career politician and really want to make a difference and maybe change might happen.
@@fromzerotohero7989 The only way to avoid FICA tax is to not work. You pay 6.2%, your employer pays 6.2%.
I’m 57 years old and I realized 15 years ago that by the time I was 65 Social security would not be around for my Retirement. I’m prepared for not getting anything from the government. My biggest concern is that the government will come after the money that smart savers like me who invested and worked hard to protect. I’m seriously considering cashing out and seeking citizenship in a country that has their crap together before the American financial system fails completely.
What did you do if you don’t mind sharing I’m 30 I’ve got about 50k liquid available to me so I’d love some advice
Given the direction this government was taking before early this month, I would say you have every right to have been concerned. I’m in that same boat, having taken very good care of my financial stability. That is, if we avoid socialism and Marxism in the future beyond four years.
You’ll be hard pressed to find a more prosperous country. Grass is always greener.
@@kingspeech2240do you have an emergency fund?
@@GeneralZeroOfficial idk grass was getting rather brown under Biden. Biden himself didnt even know he was president! Harris should of took over. I would of had more respect for her had she just took over but she didnt want to do what was right. She wanted to be sneaky about everything… or someone did!
My dad told me when I was young not to rely on Social Security, that it may or may not be there in the future so to save yourself. If it’s still there at retirement, it’s just a bonus
My friends and I often talked about his in high school, that we wouldn’t be getting Social Security and we were paying into the older generation. 30 years later, it’s comforting to know it is still the same, yet to fruition.
I came to say the same thing.
Thirty years ago “they” said SS was going to be out of money in six years.
On the plus side, boomers are going to start passing away.
And, early on, SS was paid to widows that never paid into it but got all their husband’s SS.
Maybe Social Security would have enough in the fund if Republican Representatives didn’t cut funding?