We’ve all heard the rumors that Social Security is broke and that it may not be around for some of us when we retire. How do we know what’s right and whats just rumor? The most reliable information we can depend on must come from Social Security itself and of course take that with a large grain of salt.

If you’ve ever received or looked at your own or someone else’s statement from Social Security, there are two incredibly important sections that you need to pay attention to. The first states “Social Security benefits are not intended to be your only income source when you retire. On average, Social Security will replace about 40 percent of your annual pre-retirement earnings. You will need other savings, investments, pensions, or retirement accounts to live comfortably. Use this Statement as a tool for planning your financial future.”¬†This is a clear warning that many people either don’t know or don’t pay attention to yet one of the most important statements to help us plan for our future ever publicized. Those who rely solely on Social Security benefits have either failed to plan or planned to fail… or both.

The second important statement tops them all and gives us a must more accurate prediction of what we can expect in the future and how bad things are going to get. Here it is folks: “* Your estimated benefits are based on current law. Congress has made changes to the law in the past and can do so at any time. The law governing benefit amounts may change because, by 2034, the payroll taxes collected will be enough to pay only about 79 percent of scheduled benefits.”¬†This is very clearly saying that by 2034 we will no longer be receiving the full Social Security benefits we are entitle to. How or why is this happening? It’s simple really, Americans constantly¬†complain about tax raises yet the simple economic laws of supply and demand are completely ignored. We cannot improve or maintain our benefits without increasing revenue. Perhaps people should stop trying to lower tax commitments and worry more about what the consequences are for their families futures.

Even scarier is that past statements stated 2041 and not 2034. If Social Security’s ability to pay has already diminished by 7 years, how much can we depend on this one? Here are the sample statements for those of you who haven’t seen them. Talk to a professional and start planning folks.

past SS statement


Working “under the table” is all too common these days and poses an enormous risk to the individual, tax-payers and society as a whole. While there may be some immediate gratification of not paying any taxes, the cons far outweigh the pros. If you know someone working in this manner and they have a choice, please educate them on the consequences to their future. By generating income off the books you are contributing nothing to the tax payer system and therefore are essentially getting benefits that the rest of us pay for free such as education, recreation, infrastructure, healthcare and many more. They are essentially mooching like the friend on the couch that has overspent their welcome.

As far as their future is concerned, Social Security requires 40 credits (10 years) of work in order to qualify for any financial benefits. In addition, in order to qualify for Medicare you must receive or be eligible to receive Social Security benefits or eligible to receive railroad retirement benefits. Government employees that have not payed into Social Security may also qualify for Medicare by paying into Medicare payroll taxes.

Many retirees are living solely on the Social Security benefits and unfortunate for most of us that is not enough. If you’ve worked off the books long enough to not qualify for Social Security, this means it will be up to you to create your own savings and retirement plan. In my experience, those who work under the table are not financially secure or educated enough to plan for their own retirement. These folks may have a live day to day attitude and will most likely have to either live their entire lives or depend on the rest of us to support them when they get older through hand outs.