The Future of Social Security and Lockheed Martin Employees

By Kelly Buchfink

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As a Lockheed Martin employee, are you excited about the retirement benefit you’ll receive from your company but slightly concerned about the retirement benefit you may or may not receive from the government? It’s been rumored for years that Social Security will go bankrupt and that many workers will not get their benefit which they paid into over their lifetime. Let’s take a closer look at the program and help you gain a better understanding of the future of Social Security.

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What is Social Security? Social Security is a federal program of social insurance and benefits. The Social Security program’s benefits include: retirement income, disability income, death and survivorship benefits. It’s is one of the largest government programs in the world, paying out billions of dollars per year.
What’s its purpose? Social Security was created in 1935 to promote the economic security of the nation’s people after the Great Depression.

How does it work? Social Security is a payroll tax of 6.2% on annual earnings up to $137,700. The payroll tax then is contributed to two trust funds that purchase government securities and generate interest income which ultimately pay out as monthly benefits to retirees that have paid into the system.
What’s the problem? The problem is that current birth rates are lower than what they were a few decades ago, therefore, fewer people are presently paying into Social Security compared to the number of people receiving benefits.

Demographic trends

In 1945, the ratio of workers to Social Security beneficiaries was 41.9 to 1^A
In 2011, the ratio of workers to Social Security beneficiaries was 2.9 to 1^A
In 2035, the projected ratio of workers to Social Security beneficiaries will be 2.0 to 1^A

^ Social Security Administration, 2012 OASDI Trustees Report.

What’s the projection? According to The Future Financial Status of the Social Security Program, benefits were expected to be payable in full on a timely basis until 2037, when the trust fund reserves are projected to become exhausted. At the point where the reserves are used up, continuing taxes were expected to be enough to pay 76 percent of scheduled benefits.
What’s the plan going forward? This is still being discussed and debated in Washington D.C. There are many options being considered as described in AARP’s 12 Proposals You Should Know About, some of which are:
- raising the full retirement age
- raising the tax
- raising or removing the earning cap
- lowering benefits

While it is not likely that Social Security will completely disappear, it is important to be aware of the possibility of not receiving 100% of your benefits as they currently appear on your Social Security statement. This post only scratches the surface of Social Security, so be sure to check out one of our workshops to learn even more. You can also reach our office to schedule a free consultation with a Lockheed Martin retirement specialist and receive a personalized Social Security Optimization Report. To see how much of your Social Security benefits will be taxed, check out our calculator.

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Be sure and check back next week for more incredibly valuable information. Cheers!

Disclosures*

Financial Planning and Investment Advisory offered by SWMG, LLC a Registered Investment Advisor.

Lockheed Martin Retirement Specialist is not an official title or professional designation nor is it conferred by Lockheed Martin on any individual or company.

Our Complementary consultation and free report are for informational purposes only and provided free without any obligation to utilize or retain our investment advisory services.

SMWG, LLC is not affiliated with or endorsed by Lockheed Martin Corporation. Our expertise comes from working with LMT employees for several years and helping them to retire with confidence.

Investing involves the risk of loss, including loss of principal. Past performance does not guarantee future results. Investment products are not FDIC insured, have no bank guarantee, and may gain or lose value. Different types of investments involve varying degrees of risk, and there can be no assurance that any specific investment will be profitable for a client’s investment portfolio.

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