Muncie Times, Muncie, Delaware County, 4 March 1999 — Page 28

The Muncie Times, March 4,1999, Page 28

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SOCIAL SECURITY Savings needed with Social Security By William D. Brown Most people don’t save enough for their retirement and, despite an increasing public attention to this phenomenon, there are no signs that those who most need to save are doing so. Why is this? Some believe that people simply have not confronted the fact that they can expect to live longer and will need more money in retirement over a longer period of time. Others speculate that people are still counting on Social Security to take care of them. Whatever the reason, it is clear that too many people don’t understand the role Social Security is supposed to play in their retirement planning. The role bears revisiting. From the beginning, it was clear that a government-sponsored retirement plan could not be expected to meet the total retirement needs of a worker. Individual lifestyles vary and the cost of such a plan would be prohibitive. Social Security was designed to replace a portion of a worker’s earnings. The amount depends on the level of a person’s earnings, with the benefit of the earnings of low-income persons. These persons have fewer other resources for saving and can be expected to rely on Social Security to a greater extent. Social Security benefits replace about 60 percent of the earnings of low-income workers; about 42 percent of the earnings of workers at the earning average wages; and about 25 percent of the earnings of high income workers. The benefits provide workers with a risk-free source of income that they can build on to help provide secure retirement. Thus, the average worker can use insurance, private pensions and other forms of investments to meet their retirement income needs. People who are able to use these other means effectively may not have to rely on Social Security as much for their retirement. Others may find Social Security their primary source of income. The important thing is that you recognize that Social Security provides a good start. But to meet your individual needs for the future that is growing longer, you’ll need other resources, too. To find out how much you can expect from Social Security, call Social Security’s tollfree number, 1-800-772-1213, and request a “Personal Earnings and Benefits Estimate Statement.” Did you know? Fewer than 12 percent of older Americans today fall below the poverty line? Without Social Security that number would be nearly 50 percent. Today, the average monthly Social Security benefit for a retired worker is about $745; for a worker with a retired spouse, the amount is $1,326. Since the Social Security program was enacted in 1935, the portion of the U.S. population surviving to 65 has risen from 60 percent to 80 percent. The portion surviving to 85 has risen form 10 percent to 30 percent. By the year 2050, 12 percent of all Americans will live to 100. A widow or widower may collect Social Security benefits at 60, or as early as 50, if disabled. The average monthly benefit for a widow or widower is $707. Of every Social Security tax dollar collected, more than 98 cents is used either to pay current benefits or put in reserve for future benefits. The administrative costs of the program are less than 2 percent.