Shortcomings of Social Security

You Need More Than Social Security to Live Comfortably

The news media has given most of its attention to the under funding of Social Security -- the issue that Social Security is being overtaxed by large numbers of people entering retirement and the increasing longevity of those people.

However, even with the current levels of Social Security, many seniors live in extreme poverty. More and more retirees are relying on Social Security to not only bridge the gap, but fund most of their expenses. The AARP reports that more than one-third of retirees depend on Social Security for 90% of their income.

Women, Retirement, & Poverty

Most notably, older women end up living in poverty a lot more than men. Women comprise 73.4 percent of seniors who are considered poor. In fact, one out of four older women depends on Social Security for 90 percent of their income and many of these women live in or near poverty.

Why is this? Well, women tend to earn less than men and, on average, spend less time in the workforce

• Due to home and care giving responsibilities women spend an average of 11.5 years out of the workforce. A recent survey commissioned by MetLife's Mature Market Institute found that lost employment for caregiving will translate into an average annual decrease in Social Security benefits of $2,160.
• And, when women do work, they often work at part-time jobs and are likely to earn less than their male counterparts.

Therefore, many women have not accrued enough benefits over their lifetime to earn a sustainable income from Social Security. And very few women have participated in jobs that would have given them access to private pension programs. By the mid 1990's only 18% of women over age 65 were receiving private pensions.

Even though women are in the workforce and are paying into Social Security, their Social Security benefits may not be any larger than if they had never worked.

Lifestyles were different when Social Security was designed in the 1930s. In the vast majority of households, husbands were the wage earners and the wife stayed home to take care of the home and children – the wife therefore participated fully in her husband's benefits – instead of her own -- during retirement. And, divorce was far less prevalent.

According to the Social Security Administration, divorced, widowed, and never-married women, in particular, depend heavily on Social Security. Social Security accounts for half or more of the income of nearly three-fourths of these nonmarried female recipients of Social Security. For one in four, it is the only source of income.

Social Security favors individuals who are part of a traditional family, in traditional jobs, etc... For low wage earners and people with unique work histories Social Security will not likely adequately fund retirement.

What Do You Need for a Secure Retirement?

The ideal retirement occurs when you have:

• Guaranteed Income -- enough guaranteed income (pensions, annuities, Social Security, reverse mortgages, and more) to cover the living expenses of your desired lifestyle.
• Additional Retirement Assets – 401k plan, IRA, investments or other to cover additional or unexpected expenses.
• Adequate Insurance -- Long term care insurance, medical insurance, and more to protect your assets and lifestyle.

Relocation, debt consolidation, or a reverse mortgage can help adjust your budget for a more secure retirement.