The United States Retirement Income System

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Envision feeling cold, starved, petrified, and alone, just getting home to find an eviction notice, perhaps a letter of foreclosure hanging from the door. As the room goes grey and begins to spin, four words begin to echo in the background, “Is this really happening?” All resources are exhausted and Social Security proves ineffective. Fear has taken over. Thoughts of life in a shelter cloud the room. The bills are piling high, as bank accounts begin to dwindle. Unfortunately, this is the harsh certainty of many people in the aging community. Retirement is a critical life event that everyone has to undergo, through being unprepared, many fall victim to poverty in old age. Individuals should utilize Individual Retirement Accounts,…show more content…
Social Security, on average, makes up the largest part of older people 's income (Novak, 2012.) With Social Security making up such a vast portion of retirement income, yet only maintaining 62% (Mendel &, Schram, 2012) of a person’s pre-retirement income, individuals should utilize Individual Retirement Accounts, and Defined Contribution plans combined with Social Security to avoid poverty in old age. While Social Security has made great advancements in defeating poverty, there are still many pitfalls present in the program. Franklin Roosevelt created Social Security as a safety blanket to combat poverty, in response to the Great Depression. Social security pays monthly checks to retired workers, by taxing workers payroll (FICA ;) similar to a pay-as-you-go system. Tannahil suggest that, up to 77% of current worker expect Social Security to play a role in retirement income. However, Social Security Trustees fear the Social Security Trust Fund Reserve will be depleted by 2033 (Tannahil, 2012, p. 27). This leaves the previously mentioned, 20% of individuals who depend on Social Security alone, at great risk, after retirement. A second pitfall in this government program, it that individuals who earn a higher income pay less in Social Security taxes juxtaposed to individuals with lower earnings. Social Security ultimately, only mandates taxes on individuals with an income of $118,500 or less (Consumer Reports Money Advisor, 2015, p.
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