Tim Rosen: Today, the U.S. News & World report came out with their findings that Social Security is broke. And to most of you, that is no surprise. They’ve actually updated the numbers that, as of last year, they reported that Social Security is good through 2017, referring to the trust fund for Social Security. They’ve now changed that and updated it to 2016. What I’ve tried to do here at TimRosen.tv and Conservative Money Talk, is to take the news and interpret it and to share it with you in a way that you can either benefit from it or protect yourself from it. So what do we do with this news that most of you knew anyways that Social Security is broke? What do we do with that?

Well, one, if you’re already retired, you have priority here as far as your Social Security benefits go. You’re already drawing, you’re pretty much safe. For those of you that are still working and are hoping to get Social Security at some point, well, you’ve got a challenge there. Expect to see them increase the amount of Social Security that you pay into as a percentage of every pay check. Right now it’s 7.5%; you could expect that to go to 8.5% so they can make up for this deficit. You should also expect to see them draw out and extend the date, the age that you qualify for Social Security benefits.

Bottom line, what does it all mean? Don’t count on Social Security for your retirement. When it first came out it was designed to keep you from being destitute, from being hungry. And if you’re lucky enough to get some, maybe that’s what it will do. But my encouragement to you… what does it all mean? Pay yourself, build up your wealth. You can pay yourself monthly and nowadays, with online banking, ING and Direct Capital One, maybe your credit union has a savings that you can add to automatically every month. Out of sight, out of mind. You can make it happen. You can also invest in the market. There are great opportunities if you have time to be in the free markets right now and benefit over time to keep ahead of inflation and to have some resources from which to draw from to create your retirement income.

That’s today’s news.

Reporter: This morning on today’s Fountain of Youth: Maximizing Social Security Payouts. More than 52 million Americans who draw Social Security will not see a cost of living increase next year. But according to US News and World Report’ Fall Money Issue, there are ways to pump up your benefits. Sharon Epperson is the MSNBC’s personal finance correspondence. Sharon, good morning.

Sharon Epperson: Good morning.

Reporter: First, before we get to the ways to pump up your benefits, let’s talk about why no cost of living increase this year.

Sharon: No cost of living increases because it’s tied to consumer prices and consumer prices have been going down. This is the first time that there’s not going to be a cost of living increase since 1975. But President Obama is trying to urge Congress to have a $250 one-time fee paid to retirees.

Reporter: To compensate for that.

Sharon: To compensate for that, but there’s a lot of debate.

Reporter: But that may or may not pass.

Sharon: It may or may not pass.

Reporter: Okay, so let’s talk about what we need to do, then we’ll know what we need to do in terms of pumping up our benefits. You talk about delay claiming benefits and we’ve got a graphics here to tell you why it’s so important.

Sharon: Well, a lot of people maybe thinking, “I’m really strapped right now. I want to get the money as soon as I can.” But keep in mind if you delay your benefits, you can get a lot more money. If you take it at age 62, you will get 25 percent less money in your monthly check than if you wait until full retirement age at 66. So that will be $750, let’s say, for one payout example versus $1,000. You wait until age 70, for each year that you wait up until age 70, you’ll get an 8 percent increase. You can get as much as $1,320 on this example.

Reporter: And hand in glove with that is if you want to pump up your benefits, you should be working longer, right?

Sharon: That’s right. You should be working longer because what the Social Security Administration counts is your 35 highest paying years, so where you earn the most money. So if you are in your 60s and you’re making more money than you ever made before, you want to continue working.

Reporter: Okay, now, also there is a way to take spousal benefits and keep working. What is that about?

Sharon: Well, there are two ways that you can get benefits if you’re a couple. One is you can get a spousal benefit. That’s 50 percent of your spouse’s benefit or you can get your own benefit. You can’t get both, but you can get one or the other and you probably want to take whichever is higher.

Reporter: Okay, and couples can maximize just simply doing what?

Sharon: Well, they can maximize it by taking a look at what their retirement age is. Hopefully, they’re going to wait until full retirement age, but the reality is some couples may not be able to do this. So if you’re the lower-earning spouse, you want to take it early, but wait for the person who is making more money to take their benefit after retirement age, if possible.

Reporter: So then one or the other should be delaying retirement, right?

Sharon: If possible.

Reporter: Depending on who is making the most?

Sharon: If possible.

Reporter: Okay, also, life expectancy is a major factor. What’s your best advice on how we should factor that in?

Sharon: Well, everyone is going to say, “Wait a minute. I don’t know if I’m going to live until 70. I really want to take this money now.” It really depends on your genetics, on your parents’ life expectancy per se, and your health.

Reporter: You’re going to make a guess.

Sharon: You have to make a guess, but a good way to make an educated guess is to go to Livingto100.com, a very good calculator to help you figure out what your life expectancy is going to be.

Reporter: Well, Sharon Epperson trying to help us in our waning years.

Sharon: That’s right.

Reporter: Thank you so much.

Michael J. Astrue, Commissioner of Social Security, today announced the establishment of a new Financial Literacy Research Consortium (FLRC), made up of research centers at Boston College, the RAND Corporation, and the University of Wisconsin. The FLRC, supported through five-year cooperative agreements, will develop innovative materials and programs to help Americans plan for a secure retirement.

“We have a responsibility to help the public understand the role of Social Security benefits and the need for them to save as they plan for their future,” said Commissioner Astrue. “Consequently, we have launched a research initiative to better inform the public about retirement saving options.”

The FLRC will tailor materials for Americans at different stages of their working lives – new workers, mid-career professionals, near-retirees, and those who have already left the workforce – to address the different challenges these individuals face. The FLRC also will help traditionally underserved populations better understand the path toward a secure retirement.

“The consortium constitutes an impressive collection of expertise and resources with a deep understanding of issues related to financial literacy,” Commissioner Astrue said. “We look forward to building a strong partnership with the FLRC as well as with other federal agencies with similar missions. In these challenging economic times, this partnership will help Americans to solidify their financial future.”

Lady Narrator: While the economy worsens, the future of Social Security remains uncertain. As many baby boomers approach retirement age, the funds are shrinking and expected to vanish. At the Covello Senior Center, many retirees share their concerns about this problem.

Milagros Ruiz: You know, we need that check. What are we going to live for? I will be in the street because how would I afford gas, electricity and other bills. How else would I be if not for that? Maybe I will have to live in a shelter.

Lady Narrator: Some economists say the future problems Social Security faces are due to the spending and lending of the $1.5 billion in surplus it had into the less people paying taxes after all baby boomers retire. Those who depend on that monthly check talk about what it would be like without it.

Maria Rivera: It will be very difficult for me to survive without those benefits because it helps you, you know. It’s part of all the years in the labor force. It’s money that we have worked for and the help we receive here is very important and very essential because without it, life would be even more difficult for us.

Lady Narrator: Keeping in mind the not too positive future the next generations will face when they retire, some of these seniors made a recommendations based on their own experiences.

Jorge Rivera: I wish I would have had a better job when it was time to retire. If I had known, I would have prepared to have a better job and to save money, so that I would have had something set aside for my golden years.

Milagros Ruiz: There are many people who didn’t think and spent all their money instead of saving it for their retirement. They just spent it all, but you should save. That’s why people no longer went to retirement early because they don’t have enough money and they would get less benefits, so they rather work until the last days, but the sad thing is, that those who work the longest, usually die the soonest.

If you’re worried about Social Security and your retirement, you should be. Hi, I’m Tom Cock from Merriman and let’s talk about the Social Security System. Remember this is a pay-as-you-go system. In other words, dollars are supposed to come in, dollars are supposed to get paid out. Unfortunately, the government, of course, has put IOUs against most of that money and has used it for other things, and we’ve got some bad news here in the past few days.

We learned that Social Security, the giant trust fund, is expected to run out of money by the year 2037 and will be net negative by the year 2016. Years earlier, that had been expected and the reasons why are pretty easy to understand; we’re in a recession, there are few people working, fewer people paying into Social Security and part 2 is the 78 million baby boomers, of which I am one, are getting older and they’re starting to draw on Social Security.

So what should you do if you’re still a few years away from retirement, maybe even more than that. Should you be thinking about Social Security? Should you be worried about it? Well, let’s chat about it for a minute and you should pay attention because right now, Social Security for retired folks makes up about 40 percent of their retirement income.

So it does replace a large part of the money that you make while you work and there are experts that will tell you that’s going to change in the future in terms of how you get it. We’ll touch on that in a minute, but first, some basic ground rules around Social Security.

If you wait longer, it is set up like a giant actuarial table. If you wait longer to start getting your benefits, you’re going to get more. If you wait until age 70, you’ll get about 132 percent of your benefit. If you wait until full retirement age, which for me is 66, you’re going to get, of course, a 100 percent.

But if you take it at 62, you only get 75 percent of your benefits, so what should you be doing around all that? Well, there’s all kinds of suggestions and it makes sense that if you’re married for the higher wage earner to wait longer, not start taking Social Security until 70. The lower wage earners, most oftentimes a woman to take it earlier because then when the higher wage earner passes on, he leaves that higher benefit for his wife.

It makes sense to really think about that. The one wild card in all of this is your health and your family history. If you don’t have longevity on your side, then maybe you want to take it earlier. If your health isn’t good, you certainly don’t want to wait until it’s too late to start getting that benefit that you paid in so many years.

Remember, Social Security looks at the 35 highest earning years you have to determine your benefit amount. So back to this whole question around what you should do about Social Security.

If you’re worried about it, well, let me give you some parameters again to think about. The experts believe that one of three things is likely to happen to Social Security in the next 20 years. First of all, there’s likely to be some sort of means testing. They’re probably going to look at your household and see how much money you’re taking in from your pension, other retirement avenues and say, “You’re going to get less Social Security,” that is one.

Part 2 is they’re probably going to make you wait longer to get it. You may not be able to get it until 68, maybe not until 70. Remember we’re living a lot longer than when Social Security was set up back in 1935.

And Part 3 is taxes for Social Security will likely go up in the next, maybe just a few years, from 6.2 percent to maybe over 7, no one knows for sure.

If you’re counting on Social Security, do your equation today. You should get something from Social Security on a regular basis that says this is how much your benefit should be at full retirement. Use that in your equation, but be thinking about 15-20 years down the road, you may be getting just a bit less.

I’m Tom Cock from Merriman.

Man’s Voice: For more great information and exclusive interviews, check out Sound Investing, the Podcast. Go to the best money podcast of 2008 from Money Magazine.

Female Voice: For the past year and a half or so, I’ve been listening to your show.

Man’s Voice: Look up Sound Investing on iTunes or visit FundAdvice.com.

Nicole Livas: 10 On Your Side wants to help you plan for a comfortable retirement. So we headed to Langley Federal Credit Union to sort out part of a Social Security mystery.

Tom Schaad: It’s a financial forms set up to explain the current status of Social Security and what it may hold for your future. 10 On Your Side Eric Harryman joins us now with more on what you can do now to prepare.

Eric Harryman: Tom, Nicole, it comes down to realistic expectations and staying informed long before retirement age. Don’t get me wrong though. The daunting question of “Will there be any money left when I retire?” remains. But the experts say, “Worry less, plan more”.

Commentator: With the US economy in crisis mode, many believe Social Security could disappear.

Marsha Kilburn: Are there going to be funds there when we are ready to retire?

Commentator: Kevin and Marsha Kilburn had some very valid questions about Social Security, so they came here for answers.

Kevin Kilburn: Is there any money left?

Commentator: It’s a question many believe has no guaranteed answer. But at 52 and 54 years old, the Kilburns say, “It’s very scary for our children”.

Commentator: They’re nervous, and maybe they should be. Modern Social Security benefits began in 1942 with 5 workers for every 1 retiree. In 2008 the ratio hit 3 workers for 1 retiree. The estimate for 2030 is 2 workers for 1 retiree.

Earl Johnson: You’re going to need some pensions or some saving or something else besides Social Security, you’re going to need some other income.

Commentator: Earl Johnson works for Social Security as a public affairs specialist. He says that benefits will stick around, but don’t overestimate how much you will get.

Earl Johnson: Just like you and I, Social Security is going to change, but we’ll be there for you to provide you with the security that you need with regard to retirement.

Commentator: Or at least part of it. Financial planners claim maintaining a retirement income level equal to 70% of normal wages should leave most people comfortable. Johnson, however, warns that you should only rely on Social Security to provide 60% of that total. The other 40% needs to come from another source.

Earl Johnson: You’re going to got to have some kind of savings or pension.

Commentator: Tracking your progress, no matter how far away from retirement, is simple online. We asked Kevin, a 28 year old producer to try it out. At SocialSecurity.gov, choose “estimate your retirement benefits”. After you confirm your identity and current income levels click “create estimate”.

If Kevin maintains his current income level, at age 62 he’s get about a $1000 dollars a month in Social Security benefits. At full retirement age of 67 he’ll get about $1,502 and if he works until age 70 that amount jumps to almost $1,900.

You can also chose “create additional scenarios” to figure out just how much you’d have coming in at any age.

For the Kilburns it’s a tool that can make the retirement planning process easier and a worry less.

Kevin Kilburn: It’s almost like you’re ready to go through it. You don’t really know all this stuff.

Eric Harryman: And you need to, that’s for sure. Johnson says the year to watch is 2017 because that’s the year the amount withdrawn from Social Security will overtake the amount being deposited into it. Between now and then, Johnson says, expect some big changes at the federal level to prevent that from happening and, of course, you can go to WAVY.com to find more direct links about everything that we just talked about. But wouldn’t it be great to have a crystal ball?

Nicole Livas: Yes, it would.

Eric Harryman: You could at least figure out maybe what the result is going to be.

Nicole Livas: Lot of worries there, that’s for sure.

Tom Schaad: This issue has been going on for a long time. We haven’t heard the end of it.

Nicole Livas: Thanks, Eric.

News Anchor: Joining us now with her reaction is Barbara Kennelly, the President and CEO of the National Committee to Preserve Social Security and Medicare. She is a former Congresswoman from Connecticut who is a ranking member of the Social Security sub-committee and a former counselor to the Social Security Administration.

Miss Kennelly, welcome to Bloomberg news, and Lindsey’s report painting a very dire picture. The trustees saying that Social Security fund would be depleted by 2037.

Barbara Kennelly: Well Earl, first of all, all this reporting on Social Security is dire. The fact of the matter is that last year the trustees said that Social Security could pay full benefits to 2041. Now they’re saying 2037. Would you notice that that’s three decades away? The whole program has been planned for the long term to have these kind of economic cycles going up and down. In the 1990s Social Security could only pay up to 2000 say. But no, Social Security is not going bankrupt. Social Security has a surplus. It can pay full funding till 2037, that’s what the trustees are going to tell you. And then after that…

News Anchor: Where is the disconnect between what you’re saying and some of the things that Lindsey was telling us over in that report?

Barbara Kennelly: Well, Lindsey is reporting as people report and say, “Hey, the number went from 2041 down to 2037″. And yeah, that is a drop and are we surprised? No, we have a recession. Are we surprised that tens of thousands people have been laid off and are not paying into the payroll tax. But the Social Security program has been designed specifically to have these economic going up and going down. I was on the committee in 1983 the last time we reformed it. We raised the payroll tax, we raised the age because we knew the baby boomers were coming.

So no, Social Security is not going bankrupt. Do we have a problem right now? We have a fiscal problem. We’ve got a deficit problem. We don’t have a Social Security problem because we have that surplus. Think of the good years we had in 2005, 2006, 2007, 2008. So much more money was coming in to Social Security from payroll taxes than was going out. That built up the surplus. So that’s the base we have right now. That’s why we can go up to 2037 and say Social Security can still pay its benefits.

News Anchor: Are you saying that Social Security is not in need of reform?

Barbara Kennelly: Oh no, I’m not. And you said that at the beginning of the program, no. When you said that Social Security can only pay full benefits till 2037, of course we can address those out years. But don’t forget hundreds of thousands of people are working, paying in. People act like everything stops. No, there’s all sorts of ways that you can take a little here, a little there and you should do it now rather than later so people can plan out for their futures. No, I think Social Security should be reformed, but I don’t think is Social Security should be used as a scapegoat; that now we have all these problems in the economy, “okay, let’s cut benefits, let’s raise the age”. That’s not the right way to go.

News Anchor: Well, the same question I guess applies to Medicare. What type of reforms might be needed for Medicare?

Barbara Kennelly: Oh, let me tell you something. You’re not going to get me to defend Medicare the way I am defending Social Security. Medicare has serious problems because there are serious problems in our healthcare system and if Barack Obama reforms the health care system, Medicare will do good…

News Anchor: Miss Kennelly, I’m sorry to cut you off, but treasury secretary Tim Geitner is speaking right now from Washington, let’s go to that live here on Bloomberg television.

Tim Geithner: … of the chief actuaries, Steven Godson, Richard Foster and the whole hard work of their staffs. Through generations, tens of millions of Americans have been able to count on Social Security and Medicare as guarantees that they will be able to live out their senior years in economic dignity and with health security. This year’s trustee reports once again remind us that the longer we wait to address the long term solvency in Medicare and Social Security, the sooner those challenges will be upon us and the harder the options will be. The sooner we come together to make the difficult but achievable changes needed to strengthen the solvency in Medicare and Social Security, the more time we will give the American people to plan and to adjust and the sooner we’ll be able to ensure that these vital programs will be as important for generations to come as they are today.

That’s why even as this President has focused on pulling our nation out of recession, he has made clear his commitment to work in a bipartisan way to address the long term health of Medicare and Social Security. Reestablishing fiscal sustainability, fiscal responsibility, as well as the strength of these two vital programs is essential to the economic and health security of our country. The Medicare trustees report makes clear today that there is no more important long term fiscal policy measure than gaining control of the growth of Medicare costs by delivering health care services more efficiently. These savings can only be achieved in the context of a larger effort to control healthcare costs and improve quality more generally. The most effective entitlement reform measure would be a major health reform that helps bring down the growth rate of national health care spending.

This administration is committed to working with the Congress to find ways to control runaway growth in both public and private healthcare expenditures while helping ensure that all Americans receive the high quality, affordable health care that they deserve. The recent commitment of major health stakeholder to help lower the annual growth rate and costs by 1.5% points represents a crucial step in that direction.

Now the trustees’ reports come to the following conclusion. Let me just summarize these briefly:

First: The Medicare program’s financial challenges are larger and more imminent than those of Social Security. Medicare faces demographic challenges, rapidly growing healthcare cost and the short term outlook has been hurt by the recession. Medicare’s annual cost is 3.2% in GDP in 2008, or nearly 3 quarters of Social Security’s, but they’re projected to surpass Social Security expenditures in 2028 and to reach 11.4% of GDP in 2083 compared with only 5.9% for Social Security.

Medicare’s hospital insurance trust fund is projected to become exhausted in 2017, two years earlier than projected in last year’s report. The cost of Medicare supplemental medical insurance to the federal government is projected to increase rapidly. General revenue financing for SMI is expected to increase from about 1.3% of GDP in 2008 to over 4.7% GDP in 2083 with continuing increases beyond those 75 years.

Now, this year’s Social Security report projects that the trust fund is going to be exhausted in 2037, four years earlier than the trustees projected last year. This change is primarily due to the economic recession, recent data that prompted a small downward adjustment to the projected level of real GDP, and the fact that our citizens on average are projected to live longer lives.

Nevertheless, Social Security can continue to pay full benefits for nearly 30 years and cover approximately 75% of scheduled benefits thereafter. Now to ensure that these critical programs are there for future generations, the President and this administration are taking the following steps.

First: we’re intently focused on bringing the current economic and financial crisis to an end and getting on with recovery. The return of robust growth will help solve some but my no means all of the financial problems of Social Security and Medicare.

Second: we’re reforming the health care system via cost control and improve quality which will help strengthen the Medicare program and improve the long term fiscal position of the United States.

Just yesterday, as I said, the President working with major healthcare providers helped secure a commitment to reduce future growth in costs of care by more than 2 trillion dollars. These voluntary efforts will complement the President’s efforts to enact comprehensive reform to assure quality and a affordable health care for every American. And the administration is committed to working with Congress to find ways to control runaway growth in both public and private healthcare expenditures while as I said ensuring that all Americans receive the high quality affordable care that they deserve.

And finally, after we have passed healthcare reform that puts our nation on a path of lower growth in healthcare costs and more expanded and more affordable coverage, this President will work to build a bipartisan consensus to assure the long term solvency of Social Security.

The President doesn’t believe that Social Security is untouchable politically. He believes there is an opportunity now for a new consensus on Social Security reform. The steps the administration is taking towards comprehensive healthcare reform, towards economic recovery and towards deficit reduction over the medium term will all help preserve Social Security and Medicare for future generations and it will help produce a more balanced and more sustainable growth that improves the lives of all Americans, both working Americans and retirees.

News Anchor: We’re now back for final thoughts on the issue of Social Security and Medicare with Barbara Kennelly, the President and CEO of the National Committee to Preserve Social Security and Medicare. Miss Kennelly, again of course our apologies for cutting in on your final answer but we had to go to Secretary Geitner. You were listening in, I was wondering if we might get your thoughts.

Barbara Kennelly: Oh, I thought his statement was excellent. I am thrilled that the President keeps saying he is going to do healthcare reform, and then after he does healthcare reforms he is going to look at the long term problem of the out years of Social Security and let me tell you something: my four million members and supporters want to work with him. We don’t only care about Social Security for ourselves, we care about it for our children and our grandchildren. I thought that the statement was excellent. I thought the attitude was excellent, and I want to once again say that they did say that Social Security can pay full benefits for the next 30 years.

News Anchor: What would your organization be pushing for when this debate is finally joined?

Barbara Kennelly: Well, what we’re really worried about is when you hear about entitlement reform. Entitlement reform, to a lot of people, means cuts. And what I don’t want to see is… Social Security benefits are very moderate, about $13,500 a year. And so when you talk about cutting benefits I get very nervous. You talk about raising the age, yeah, we have to look at that but right now it’s up to 67 and I’ll tell you a lot of people who are 65, 66 and 67, there’s no jobs out there for them, so there’s a lot of work to be done. But I thought that the treasury secretary’s remarks were excellent and I look forward to working with this administration.

News Anchor: How do counter those who have been calling for the privatization of Social Security.

Barbara Kennelly: I gave my life to it for about five years. Aren’t we glad now that we didn’t put some of the Social Security trust fund’s money into Wall Street? Already peoples’ 401Ks are down, the worth of their house is down. I’ll tell you something: privatization is over. That thought we don’t even get. It’s looking at the entitlement reform and what some people really want to do is get rid of the entitlements. So there is always a fight. Ever since Heckler and Roosevelt there have been enemies of Social Security, they’re going to look at what the surplus is just a year or so in the future, not long term surplus. And that has gone down because of the recession. People aren’t working.

News Anchor: Miss Kennelly, we have about a minute left. I was wondering what kind of benefits for Social Security and Medicare are you and your organization willing to give up to help reform the two systems?

Barbara Kennelly: I was there in 1983. I was on the Raise & Means committee doing the reform. And it was a combination of many, many changes in the Social Security system. The Social Security system is very complicated. Everybody’s Social Security is different, it is computed differently. And so yeah, you have to look at what’s coming in and what’s going out. We have what’s called the [...] where you do a certain amounts to become benefits. There are ways you can do it. Are they going to have to raise the age? I don’t know. Maybe, maybe not. But there are all sorts of things that can happen. It goes into a package and that package can be a pass. What I don’t want to see is just benefit cuts and raise the age and not looking at the whole program.

News Anchor: Barbara Kennelly, President and CEO of the National Committee to Preserve Social Security and Medicare joining us from Washington, thanks.

TV Interviewer: Are you worried about your Social Security and Medicare?

Man1: Not particularly, because the risk of insolvency may seem a bit closer today than yesterday, but I have faith that the government can enact reforms to force through all that.

Woman 1: Absolutely.

TV Interviewer: How so?

Lady1: I don’t think it’s going to be there by the time I retire.

Man 2: A little, I won’t say a lot because I am sure that there will be some resolution to it.

Man 3: I wouldn’t say worried, I’m just not confident I am going to receive it. I am making other plans, that’s why I am not worried.

TV Interviewer: Would you prefer to see an increase in taxes or reduction in benefits to help solve this problem?

Man 4: Realistically I think it is going to have to be a combination of both. That the Americans that can most afford it need to have their benefits reduced, and perhaps the tax rates and some of the income levels that… like hedge fund managers that get theirs at a reduced rate of taxation… maybe should pay the full rate of taxation and Social Security.

Man 5: The reduction in benefits is probably going to be more feasible. I don’t know which, they’re both not a very good solution but, you know, of those two that’s the one I would prefer.

Woman 2: I think unfortunately an increase in taxes is the only answer.

Man 6: Probably a combination of both. Some decrease in benefits and some increase in taxes to pay for it. That’s seems to me like a reasonable solution.

TV Interviewer: Do you think we should revisit the idea of privatizing Social Security?

Lady 3: Ha, ha, ha. I don’t think we should revisit the idea of privatizing anything. The era of privatizing, of taking the responsibilities of government and farming them out to the lowest bidder who winds then jacking up the prices on the private citizen is just outrageous.

Man 7: Yes, I do think that despite the fact that the Bush plan was based on the assumption that stock markets would always rise, which turns out not to be the case, a system more based on individuals makes more sense.

Lady 4: Look what we’ve done on Wall Street and look at the mess we are in now. I don’t think giving it to individuals will help the situation any better.

Man 8: It hasn’t worked so well with the government so maybe we should give privatization a try.

What about our readers? Do YOU worry about your Social Security and Medicare? Post your comments below.

Social Security Representative: The benefit information will change, but you won’t really see it. The interesting thing that some of our clients don’t understand is that Social Security disability is calculated, you know, the amount, is how much an individual would get at full retirement.

So if you get disability, say you’re 55 and you go on disability, then when you get to be 62 and you start thinking about a retirement benefit, the retirement benefit is your full retirement reduced. Well, you went and switched over to your retirement benefit. So our client doesn’t have to do anything while they are on disability. What we do is that when they get to be full retirement age, then we change the disability wording on their record to say retirement, because nothing works than sending somebody a disability update package and they’re 70.

Senior Citizen: Right.

Social Security Representative: You know, that’s why we take that information off. We correct our records because we keep track of our clients based on what we need to do for them and if they’re past full retirement age, we never need to update their disability information.

Senior Citizen: Okay.

Social Security Representative: I like to use this question here because the answer is something that most people should just kind of understand, but sometimes people get pension systems mixed up. Social Security does not have a fixed amount for an individual when they get to be 62.

In fact, with my sister, up in Canada, they have a fixed amount that an individual gets because of being a worker in Canada and then you get something above and beyond that. Well, for workers in the United States, we look at how much you’ve earned and paid into the system to figure out how much you’re going to get.

We send out a benefit statement every year. That’s what people need to do. Pull out their benefit statement, you look to see what your benefit is at age 62, what your benefit would be at age 66, if that’s your full retirement age. Well, for that four years, if your difference is $480 and there are 48 months there, well, then you know that your benefit is going to increase $10 per every month that you wait and hold off retirement from age 62.

So do the math, do look at that benefit statement because that’s the first place that you need to start looking when you start doing some retirement planning and you don’t have to wait until, you know, a date of birth. You don’t have to work until January. Sometimes retirement plans are, you know, personal.

Senior Citizen: Right.

Social Security Representative: You know, maybe October is the right time to go out on retirement for you and you can find all that information on our website to help make those decisions.

Senior Citizen: It’s awfully hard to get along anymore without the access to the Internet, isn’t it?

Social Security Representative: Well, and that’s the thing is that if you’re paying for Internet access and you have it at home, use it.

Senior Citizen: Right.

Social Security Representative: Also, we’ve talked to a lot of individuals where the libraries have got Internet access. We have some tribal council organizations that make Internet access available to their members and so use the access where you have availability, but be, you know, safe. Be sure to come right into our website, socialsecurity.gov.

Senior Citizen: Okay, thank you, Mark.

“I’m just curious. How many people think we should delay Social Security as long as possible? A few folks. You’ve seen my talk before? How many think to take it as early as possible. A few folks. Okay.

And actually, the answer… there is not a single answer here. It is a personal decision like we heard earlier from Nick. But I just want to give you some insights into this. First of all, this is a chart which just shows the monthly benefits and this is just an example. We are looking at someone who is earning $75,000 in 2009 and had always been making this amount. This is for a single person and if you’re married, if both of you work, each of you will get a benefit that comes from these kinds of charts and then your household income is just the sum of the two.

If one of you didn’t work or works sporadically then there is a special spouse’s benefit, which I will get to in a second. But just look at this chart. Say you are born in 1950, if you retire at 62, the monthly benefit is $1,470. If you retire at 65 its $1,850. And this person their full retirement as Nick was talking earlier is 66 and so their monthly benefit would be $1,980. And finally if you wait till age 70 the monthly benefit is $2,660. So you can see that there is a pretty dramatic increase in the amount of your monthly benefit if you delay your retirement benefits.

This is the same chart but for a married worker where the spouse didn’t work, and this is just a sum of the workers benefit and the special spouses benefit. But it’s the same pattern, you know, if you delay your benefits then your benefits go up. And so I like this chart. You know, when you put up charts that show percent increases it’s hard to relate to a percent, but here monthly income we can relate to a dollar amount of monthly income. It makes it easier for us to decide what’s the right thing to do.

This next chart, though, gets at the heart of the strategy that I’ve been talking about, and it’s kind of a complicated chart, but once I explain it, it’s not too bad. So, what we’re looking at is the first column here, is what would happen if you started benefits at age 62, which is the earliest possible age. And this is for someone who, again, made $75,000 per year in 2009 and who was born in 1950. So, their initial income per year would be $17,640. If they lived to age 70 and then died, they would have 8 years of getting the $17,640. Their lifetime income would be $141,120.

If they had lived till age 80 and then died then they would have 18 years of getting that amount of $17,640. Now their lifetime income is $317,520. If they lived until 90 and died it would be $493,920. If you instead waited until age 66, your full retirement age, then your annual income is that first row, $23,760. If you live until age 70 and then die, you will only have 4 years of that, $95,040, and then so on down the line.

If you decided to wait until age 70 to start your benefits, now it’s grown to $31,920. Now if you would have waited until age 70 and then you died at age 70, bad move. Okay? Because then you’re going to get nothing. But if you had waited until age 70 and lived until 80 you’d have 10 years worth of that amount, $319,000. And then if you lived to age 90 you would have $638,000.

So what you do is you think, “Well, the lifetime income that I am getting, the sum of all this money from Social Security, where is it biggest?” Well, if you died at age 70 your good move would have been to take it as early as possible. If you would have died at age 80 the best move would be to take it at age 66, and if you died at 90 you would be waiting till age 70.

So all this is showing is that the longer you live, the better off you are by delaying your retirement and your Social Security benefits. Now, remember earlier we were talking about life expectancies, and we saw that the average life expectancy got you into your early to mid 80s. If you’re taking care of your health and you’re adding those 5 or 7 years of healthy life like I talked about, you might get to your late 80s early 90s. And so these are the kinds of things you ought to consider when you are thinking about when you should start your Social Security benefits.

What I have done is tried to give you a way of thinking about this so that you can come to an informed decision rather than just hearing what your sister did or your brother did.”

Thanks to RestofLife.com

Proponents of a privatized system have argued for years that private accounts would be totally safe because they would be limited to blue chip stocks exclusively. The type of companies investors would call a sure bet for long term investments. Companies like Bear Sterns and Lehman Brothers. What could possibly go wrong if we invested our Social Security accounts in those types of companies?

Apparently everything could go wrong. Both Bear Sterns and Lehman Brothers, two of the largest financial companies on the planet, had a complete collapse. Can you imagine if people’s Social Security benefits were tied into those companies?

Think about the pressure this would put on the government to keep these types of companies afloat. The amount of expense to the taxpayer that would have to go into it would be tremendous. Not a pretty picture is it?

Unfortunately, the current situation is not much better either because the Social Security Trust Fund is already guaranteed by the government and ultimately the taxpayer. The way the system was set up, it has become a burden to just about everyone.

Therefore, Social Security should not be privatized, it should be abolished – in a safe and slow manner. Seniors should still get what they paid for and what they were promised, but we must stop being cruel to young workers who are forced against their will to pay into an antiquated system they might not agree with and that might not ever benefit them at all.

Abolish Social Security, pay outstanding benefits by raising taxes or printing money, and allow everyone else to invest their money as they see fit. If some people (rightly) believe stocks are too risky, they can buy government bonds instead, or real assets that preserve their value over the long term, like gold.

Whether your official retirement age is 65 or 66, which will depend on when you were born, it is better to wait for that time rather then request your payments at a younger age. The reason is simple: if you decide not to defer your payments, you may end up paying the money back.

This is because anyone who is still earning a wage that is not directly related to an investment income from a healthy portfolio may not qualify for full Social Security as an untaxed income. This is also dependent upon the limitations placed annually on income levels. For example, this year the limit is $14,160. Every time you go over that amount by $2, you will lose $1 off of your checks. This adds up quickly, especially since most who are still working will receive much more then that.

This rule only applies for those who are not yet at their retirement age. Once you hit that point, you will be able to earn any level of income, and still receive full benefits from your Social Security fund. So don’t worry about losing the funds in the meantime, they will still be there. Deferring your checks is a positive move, not a negative one, and as long as you don’t wait too far past your retirement age, you should be just fine.

Consider saving benefits for age 65 – 70. You might be glad that you did.

Because of this oversight, more and more of those over the age of 55 are going back to work, often getting minimum wage and taking long hours just to survive. To make sure this doesn’t happen to you, there are a few important things to keep in mind:

What are your annual expenses? This is one very important thing to consider when figuring out how much you will need to retire. Always add in other elements, such as inflation, and put away a certain amount for unforeseen events, such as car or home repair, or emergencies.

What investments do you currently have, or can you purchase, that will allow for sufficient growth? Saving isn’t enough. You need to have an active portfolio with investments that will continue providing income through your retirement years. Make sure you have a well balanced portfolio, as many several investments with great potential.

What can I withdraw annually from my investments without damaging my purchasing power? This is a question many have, and it will depend mostly on the size of your portfolio, as well as what you plan on leaving behind as a part of your estate. Try to draw as little as possible to maintain your lifestyle.

What accounts should be drawn from first? You should always make use of taxable accounts before dipping into tax-deferred, such as 401(k)s, so that interest can increase the amount to its highest possible limit before you use it as living expenses. It is wise to allow your investment accounts to grow to full season before relying on them as income.

What about Social Security? Social Security is always a valuable option, especially if you have a weak investment portfolio. However, you may want to wait until 65 before applying, as signing up at 62 (the minimum age) can greatly reduce the monthly amount you receive on your checks. However, Social Security, added to any valuable taxable accounts is a great way to maintain a decent lifestyle all through your retirement age, without having to return to work in your golden years.

When the value of all these debts are added together, says Greer, they far exceed the revenue created by the aggregate amount of the global economy. Basically there is not enough money on the planet to pay for these debts.

For anyone approaching retirement age this is bleak news. It has become a common practice for a large number of people across the world to base a substantial portion of their income on investments. However, if the global market is as unstable as Greer claims in his blog post, these securities will lose the vast majority of their value in the coming years resulting in massive losses to everyone’s retirement plans.

It goes beyond securities however. Even money put into simple saving accounts at people’s banks will be under threat. The weak global economy will ultimately create a period of substantial deflation. The problem is that most of today’s wealth is just paper. The wealth is not based on anything substantive. In other words it is imaginary wealth. As the market comes to realize this the value of our money will begin to drop, possibly to the point it is virtually worthless.

Totten argues that this destabilization in the economy will be felt across all market sectors – stocks, bonds, currencies. Even assets like crude oil will lose the vast majority its value. Within the next decade or so there will be no safe bet for retirees to rely on.

The question is what happens after this current economic crisis is over? The news is still not good. The current retirement system is based on the “age of abundance.” When the dust settles and the current crisis is over we will have left this age behind and returned to a time where the majority of economic activity happens outside of the market. Household economies that used to exist in the past will arise once more. The success of these households will depend on the contributions of everyone, including the elderly. Of course this process will not happen overnight; it will take many years before this type of economy rises again.

For anyone near retirement age or already retired, Greer advises you to take all your money and put it into the most stable investment you can find. Also it is essential you begin putting a Plan B into place right away.

Following their study, Scottrade concluded that only 32% of respondents, 7% less than that in 2008, expected to fully retire at their retirement age. They also observed that retirement accounts of 43% of respondents had decreased by 10% or more since 2008 and that 67% Americans did not plan to contribute to IRA. Also, though 77% of the respondents were concerned about Social Security, more than half were pretty sure of it running out before they retired.

Furthermore, 61% of respondents were confident of their retirement planning ability with Gen Xers (64%) and Boomers (67%) believing in curtailing expenses. Gen Xers did it by using coupons (66%), cutting back on entertainment (65%), paying down debts (57%), and reducing credit card spending (55%) while Boomers (67%) did the same by comparison shopping (70%).

Confident of saving enough, only 5% Gen Yers used advisers for retirement planning as against 28% who planned independently. They were also considerably focused on working more to earn more (30%) and searching for a better-paying job (29%).

The pamphlets that are being handed out to people between the ages of 25 and 35 works to dispel some of the rumors about Social Security, and better inform workers about that benefits of saving. Some of the information speaks about the chances of SS being around for their retirement, as it has been projected that funds will run out by 2041.

It also explains the importance of adding small investments over time, as even $25 a week, with compounded interest of 5%, will come out to almost $165,000 within forty years, which would put many of the young workforce at retirement age. This would be in addition to benefits that the SSA assures us will still actually be there.

According to the Social Security Board of Trustees, in 2041, taxes will still allow for “$780 for every $1,000 in benefits scheduled”, which will be enough to supplement an already well established retirement fund. But this is fully the responsibility of the worker, and so the issue is an important one.

Young workers can start expecting to see the inserts within the coming months, which are similar to those given to workers over the age of 55, explaining all possible benefits, the way compound interest increases investments, and how to make the most out of your retirement funds. It also discusses the way that Social Security payouts work, and the chances of applying for, and receiving, disability in the case of early retirement.

Boston College Center’s director for external relations Andrew Eschruth believes that a lot of retirees may not be able to continue with the lifestyle that they’re used to because according to the guideline that they’re using, for someone to be able to live at ease after retiring, they would need at least 65 to 85% of their pre-retirement income.

Back when George W. Bush was still President, he recommended the idea that a share of the Social Security be placed in a private investment of some sort. However, it became a big issue that came under so much scrutiny that his administration decided to let this suggestion go. Now that a new President has taken over, it’s up to him to come up with a solution on how to organize this “mess” concerning Social Security.

In view of the fact that this may happen, the Boston College Center proposes future retirees to consider other option to bridge the gap of their income need once they’ve stopped working. They suggest something that is fixed and binding and would ensure them a good life by receiving the proper amount they need to maintain their standard of living. One such resolution that they’ve been contemplating on is an “exploratory idea” where the obligatory involvement of an employer to pay their workers is required.

It seems that retiring nowadays is a hard thing to do especially since one might face more financial problems due to inadequate resources. It’s good to know that some people have the initiative to try and deliberate upon an answer that will greatly affect a lot of people in the coming years.

For generations, American workers have relied on a combination of pension funds and Social Security for financial security in their retirement years. In the past decade, both systems have come under scrutiny.

Pensions consist of a combination of employer or employee contributions. Some pensions involve a combination of funds from both the employee and his company. The monies are typically invested in stocks, bonds or mutual funds. The objective is for the portfolio to accumulate investment wealth so that, after a number of years, the fund can serve as income for the worker throughout their retirement.

Types of pensions include a defined benefit plan, 401k plans, profit sharing and money purchase plans. The defined benefit plan guarantees the worker a specific monthly income upon retirement. 401k’s, which have become hugely popular, combine employer and employee contributions in a portfolio that is invested in mutual funds. Profit sharing gives the worker a stake in the ownership of their company and money purchase plans involve strictly company contributions.

Many pensions have shifted from money purchase plans to profit sharing and 401k plans. Many companies have altered their philosophy on pensions and are encouraging a combination of risk from their business and the worker through mutual contributions.

Social Security is taken from every American worker regardless of age, employment or income. The government uses the money to establish, in a sense, trust funds that cover expenses for retirement and various disability or survivor insurance. The government’s promise is that every worker will eventually benefit from the program when they retire or are disabled and prevented from working. Most working Americans begin to receive Social Security payments when they reach age 63.

In addition to money taken out of a worker’s paycheck, the worker’s employer has to make a matching contribution to the Social Security program. Therefore, what the worker sees on their paycheck as their contribution is only half the money.

Much debate in recent years has focused on whether or not Social Security can survive the retirement of the Baby Boomer generation. Americans live longer than ever before and many experts feel the retiring Boomers will drain the system of funds within 20 years. Many in the industry maintain that Social Security will not be available to workers under the age of 40.

In the past the Social Security Administration considered the age of retirement to be 65. At this age you would be able to begin accepting retirement benefits from Social Security. The amount of these benefits was determined on the basis that the majority of workers would chose to stop working a full time job and want to start claiming their retirement benefits at the age of 65.

In recent times, however, people have been living longer, healthier lives. This makes the Social Security Administration feel that the age for retirement is changing because people are choosing to persue active work at and through the age of 65. On this basis, they determined that the policy should adjust the age that you are able to claim full retirement benefits. They did that by raising the age that you can claim full retirement benefits at to age 67. Note well that this change only applies to anyone born after the year 1960. If you were born before 1938 then you can still fully retire at age 65. The SSA is attempting to gradually increase this age from 65 to 67 by rolling it out over many years based on the year you were born in.

There is a very simple answer to this very common question. The short answer is – yes, you absolutely can. In fact, this is very common. If you are past the retirement age and chose to still work you are able to do so without forfeiting any Social Security benefits. There is no limit to the amount money you can earn when working past retirement either.

Now, on the contrary, if you seek to collect your Social Security benefits prior to the age of full retirement as determined by the Social Security Administration, then you will lose $1 of your benefits for every $2 that you earn during a set yearly period. This limit applies solely to any income that you earn while working. It does not count passive earnings from investments, pension plans or savings accounts. Even if you have a source of rental income, this will not count toward the penalty. These sources of income will not affect the amount of Social Security benefits you receive. Be sure to keep this in mind before attempting to claim Social Security before you have reached the age of full retirement.