Social Security: What Happens When It Goes Bust?

Social Security is the primary or sole source of income for over 90% of America's elderly. When FDR signed Social Security into law in the mid 1930s there were roughly seven workers for every person drawing from the fund. That has been turned upside down and will only get worse, dramatically worse, when the bulk of the Baby Boomer generation (those born in the roughly two decades after WWII) begin to collect their Social Security benefits. The plan was initially conceived to be a safety net for seniors to avoid the financial destitution of the Great Depression. It was never intended to meet all the financial needs of America's elderly.

Congress has consistently failed to enact any kind of meaningful, long-term reform that will preserve Social Security for future generations. Private economists, and a few honest public officials, have been blunt in telling Americans the days of Social Security are numbered. Exactly when it will go bust is the subject of many varied opinions. But bust it will surely go. Even the government's own projections call for insolvency by mid-century. Analysts are calling for either huge and immediate reductions in benefits paid out, or large increases in contributions - or both. Fed Chairman Alan Greenspan warned us back in 2004. Long story short, Social Security is not going to be there for us like it was for our parents.

The resources that we, as a nation, are spending on military operations in Iraq and Afghanistan plus the recent stimulus package and corporate bailouts are putting a huge strain on the federal budget. Add to this the fact that nearly 80 million Americans will soon be looking to collect both Social Security and Medicare benefits. What do you think is going to happen? Will we have the resources necessary to meet those obligations? We're already running record budget deficits. We've become the world's largest debtor nation. We import far more than we export: our trade deficit is enormous. Many Americans are up to their eyeballs in consumer debt. Mortgage foreclosures are at record highs and increasing because home buyers got into adjustable rate mortgages that they can no longer afford to pay. Over the long haul -the next few decades - the value of the US dollar can only be headed in one direction: down.

At the risk of painting a doomsday scenario...the point is simply this: We are all going to have to assume a greater degree of responsibility for our own retirement income..because we can no longer count on the government to do it for us. Even though most of us have paid into these funds - Soc Sec and Medicare - during most of our working lives we need to face up to the reality that these benefits are not going to be there for us as they were for earlier generations.

So what's the solution? If you could put in two to four years effort, just part-time, and develop an income that would pay you several thousand dollars a month...for decades...would that be worth it? If you were going to begin such an endeavor, when would be the best time to start? With so many people on the verge of retirement what are the growth industries in the years ahead? Do you think health care might be one of them?