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How does Social Security Work?
When you work, you pay taxes into the Social Security system. Then, when you retire or become disabled, you can apply for the benefits you've earned. You won't outlive your Social Security retirement benefit. It will be there for you for the rest of your life. Your Social Security benefit won't lose its value. From time to time, Social Security benefits are adjusted so they always keep pace with inflation. (Related:
Personal finance for empty nesters)
Social Security is largely a "pay-as-you-go" system with today's taxpayers paying for the benefits of today's retirees. Money not needed to pay today's benefits is invested in special-issue Treasury bonds.
The amount of your Social Security retirement benefit is based on several things:
- Years that you have worked.
- How much money you made.
- Your age when you start receiving benefits.
Is Social Security in trouble?
There is no good answer since the issue is highly political and everyone who has done has any research has an agenda.
Plus, as we all know, when we talk about the future, no
one has any clue and depending on the assumptions you
choose to make, you can come up with any answer you
want. The conservatives, who never liked the idea of Social Security
in the first place, think that this is the best time to get rid of social security since President Bush has fallen into their trap and all branches of government are now controlled by Republicans. That is why they are creating an impression that the crisis is very severe though other analysts disagree. As one analyst put it, "The social security crisis, like the weapons of mass destruction, is a figment of Bush's imagination."
Supporters of Social Security argue that while the program is not in perfect shape,
it is projected to have enough assets to pay 100% of benefits until 2042. Even then, incoming revenues will be enough to pay more than 70% of benefits for decades to come. Social Security's financing problems are long term and will not affect today's retirees and near-retirees.
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Americans
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situation
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