Health Insurance Online
Phone Icon
Call now to speak with a Licensed agent (866) 954-1892

Insurance Type:

Taking Care of Mom and Dad: Social Security Introduction

When my dad had a heart attack at 64, I started thinking about more than just his health. I started to wonder about his income, his spending habits and how he'd make it through the rest of his life without working part-time. When I started looking into things like Social Security, I discovered that he wouldn't get his full retirement benefits until he turned 65. I knew that he could sign up for Medicare at 65 -- but that, if he could put off Social Security for a few more years, he'd get a bigger check each month. I wanted to tell him what to do...but I didn't know how.

The major source of retirement income for Americans today is Social Security, the federal government's pension program. Social Security pays cash benefits to more than 90 percent of people who are age 65 or older, and nearly two-thirds of the program's beneficiaries receive more than half of their income from Social Security.

But there are fundamental problems with the program. As more Americans live longer, Social Security is heading for an actuarial disaster. Currently, the program takes in more in taxes than it pays out in benefits. The excess funds are credited to Social Security's trust funds, which are expected to grow to over $4 trillion.

It's important to point out that Social Security trust funds aren't true trust funds. They are simply I.O.U.s, paper by which the government promises to pay itself back sometime in the future. If a private company used this scheme, the government would step in and put the people running the thing in jail.

In about 2017, the program will begin to pay out more in benefits than it collects in taxes. Once this happens, the government will need to divert money from other programs to Social Security to maintain the benefits it has promised. By 2041, the fictional trust funds will be exhausted and payroll taxes will -- according to the government's own projections -- only cover about 73 percent of benefits owed.

You probably don't need to worry about Social Security going broke before your parents pass away; but you should consider how its grim prospects will affect you.

In this chapter, we'll look at how Social Security works and what it can do for your parents. It can be a beneficial tool for supplementing your parents' income -- but it's likely to change throughout the 2000s and 2010s. Congress is constantly considering proposals to revise Social Security, in response to estimates by the system's Board of Trustees that Social Security will be insolvent by the late 2030s. (That terminal date varies according to assumptions made and the organization doing the estimating.)

Google Plus One