NORTHAMPTON, Mass. (WWLP) – Social Security is on track to go broke. That is why it may be more important than ever for young people to start saving.
Signed into law by President Roosevelt in 1935, Social Security gives retired people a continued income, but the system is going broke.
You see it deducted from your paycheck but will you ever get back what you put in? Projections say Social Security will go broke by 2034. Benefits stayed flat in 2016 and will only rise by about $5 a month in 2017.
Over the years the age you can start collecting dropped from 65 to 62, but the age you reach full retirement climbed to 67.
“I think people really do need to invest,” said Ann Michele Ruocco of Northampton. “Social Security was created to help the poorest of the poor. But for young people, I don’t think it can be said enough. They have to invest for their retirement.”
Investing young is the best idea. Take advantage of a work 401k plan and the company’s free money by investing at least up to their match percentage. Earnings in a ROTH IRA can be withdrawn tax-free while contributions to a Traditional IRA can be deducted from your taxes. Financial planner Steven Doury told 22News social security shouldn’t be your only lifeline.
“The burden over time has shifted to the individual. The days of corporate pensions are for the most part, behind us. Social security, while I believe it will be available to future generations, should not be thought of as a soul source of retirement,” said Doury.
Young people we talked to said their more worried about current debt than retirement.
“Yeah I do have a ROTH IRA,” said Northampton resident Katrina Strikas. “My mom made me open it up. But it’s not a priority right now, I’m just focusing more on paying off my student loan debt.”
The average social security check is about $1,300 a month. Stephen Doury told 22News that investing young gives time for your interest to earn interest, which compounds and grows over time.