Retirement and you: Cutting through the Social Security bull

You may be wondering if Social Security will be there when you retire. If you're 20 or 30-something, you've probably already been convinced the money will run out before you ever get there. I believe it's all scare tactics to try and sell a privatization plan that would kill Social Security.

Social Security is a pay as you go system. About 85% of the money you are now paying into Social Security goes directly toward paying people who are now collecting it. The other 15% goes into the Trust Fund. The Trust Fund was almost out of money in the early 1980s, when Alan Greenspan headed a commission to fix Social Security. The commission recommended raising Social Security taxes, which have been in place since then. The raise was intended to build up the Trust Fund so there would be enough for the Baby Boomer generation when it was set to retire.

It's true that in 2017, we'll start drawing down the funds in the Trust Fund, because there will be a large growth spurt in Social Security payments as Baby Boomers start collecting. It's true that right now it's projected those Trust Funds will be used up in 2041, but that date gets adjusted each year depending on actual results of the fund.

Of course, when and if the Fund actually runs dry is largely guess work. Someone born in 1965, when the population explosion finally started to slow after World War II, and generally considered the end of the Baby Boom, would be 76 years old in 2041, which means we'll be nearing the end of the Baby Boom population's retirement phase. Many Baby Boomers will likely be dead by that time. Average life span is about 78 years and experts expect that may even drop because of obesity in the U.S.