How To Save Yourself From The Retirement Meltdown

Imagine you’re on a boat that has sprung a leak. The damage to the hull can’t be repaired, so the vessel is constantly taking on water. It’s not a good situation. Fortunately, there are 20 able-bodied passengers aboard to help bail, keeping the ship afloat.

But after a while, one of those exhausted passengers stops bailing. Then another stops. And another. One by one the remaining bailers give up, until just two are left.

If you have a job right now, then you’re one of these last two passengers. It’s your work, your “bailing,” that keeps the Social Security system afloat. In the early days, there were 20 workers just like you depositing into the system for every one retiree receiving benefits. Over the years, that ratio fell to 15:1, then 10:1, then 5:1. Now, there are just over 2 workers per beneficiary.

Of course, when it comes to Social Security, the boat isn’t filling up. It’s being drained dry. But either way you look at it, we’re stuck with the same problem. All taxpayers and retirees are crammed in this boat, which is looking less seaworthy by the minute.

The U.S. Government’s Slowly Sinking Ship

Ever since 2010, workers have paid less into Social Security through payroll withholdings than is paid out to retirees. The deficits are projected to get wider and wider with each passing year. By 2020, the interest will be insufficient to cover the shortfall and the trust fund will have to start dipping into reserves to maintain benefits.

According to the Social Security Administration’s own projections, those reserves will be tapped out by 2035.

You don’t need a Ph.D. in mathematics to understand that this dire situation is untenable.

That’s when things really start getting ugly.

Simple demographics mean the shortfall will only get worse in the years to come. According to the Social Security Administration, the life expectancy of a 65-year-old was almost 14 years in 1940. Today it is just over 20 years. And by 2035, the number of Americans 65 and older will increase from approximately 56 million today to over 78 million.

Every day, 10,000 Baby Boomers become eligible to start drawing benefits. That’s 300,000 fewer people paying money in each month — and 300,000 more taking it out.

Unless something is done by soon, we will be out of options. By 2035, the government will then have two equally terrible options: hike payroll taxes by 32% or slash benefit payments by 25% across the board.

Families (particular those with lower incomes) are already facing a dire situation when it comes to retirement. And that’s before considering a slash in benefits. And you know hardworking families won’t stand for such a significant tax increase, either.

Moving On From A Broken System

Sure, we could raise the retirement age to 70 as some have suggested. But I for one don’t relish the idea of punching the clock that long. There just aren’t any easy solutions. And that’s why there hasn’t been any real legislative push to shore up Social Security since 1983.

Personally, I’m not relying on Uncle Sam to meet my retirement needs. And neither should you. If there is still money in the system in 2036, that’s great. But at the rate the system is hemorrhaging money, I’m taking charge of my own financial future well before then.

The key is to have a second income source that is free of the shackles and restraints of Social Security. Regardless of what happens in Washington, a second revenue stream can put extra cash in your pocket each year.

Think about it this way… With the right balance of stocks, preferred stocks, REITs, income funds, and more in your portfolio, you don’t have to lose any sleep at night over unnecessary risk. And thanks to capital gains, you could even take a “lump-sum” payment every now and then (maybe to pay for a vacation). You can even pass down any assets that remain unspent to the beneficiary of your choice.

Let 2020 be the year you decide to free yourself from relying on the fragile Social Security system. You’ll be glad you did.

P.S. Let me ask you a question… Are you earning enough for retirement?

Maybe you own a few high-yield stocks that pay 8%… 10%… maybe even 12% a year. But the stocks on our “dividend map” blow those numbers out of the water. Their dividends have risen so fast over the years that you won’t believe what they’re paying today… and they pay our followers in cash.

I urge you to see for yourself how this works. It might change the way you invest forever.