Should future retirees heed media headlines about shortfalls in Social Security and failed corporate pension plans?
The headlines might be a bit overblown at times, but the facts behind them are real. Social Security is running out of money. People are living longer and having fewer children. This leaves fewer working-age people to support each retiree. This demographic imbalance means that by 2019, Social Security will begin paying out more in benefits than it receives in taxes. The CBO [Congressional Budget Office] projects that the trust fund accumulated over the years to pay the Baby Boomers’ retirement benefits will run dry in 2052. As a result, future Social Security benefits will decline unless taxes rise, other government services are cut, or the government borrows from future generations. Some large employer pension plans are also in trouble, particularly in the airline and steel industries, because the firms themselves are in or near bankruptcy. The good news for retirees is that a federal agency insures accrued pension benefits, so that retirees will continue to get their pension checks,
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