Social Security turns 70
Experts urge young not to expect much

By HANK EZELL

Cox News Service

August 14, 2005

ATLANTA — If you are 55 or older, say happy birthday to Social Security.

President Franklin D. Roosevelt signed it into law on August 14th 70 years ago, and soon it will be your turn to cash in.

If you're younger, however, it's not at all clear what benefits will remain for you to be thankful for.

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In political terms, Social Security is a dinosaur, a football, a headache or the hope for tomorrow. The program costs more money than a lot of people want to pay. But it can't be thrown out with the trash, because it benefits tens of millions of Americans.

But what does it mean in financial terms — in dollars, not politics — to American families old and young?

Financial advisers tend to think that only the oldest workers should have much confidence in Social Security. "There is no political will to bother those people at all," said Bonnie A. Hughes, a certified financial planner and founder of A&H Financial Planning & Education Inc.

In the older age bracket, the main question is when to start taking your retirement benefit. You can begin as young as age 62, but you will have to accept a substantially lower monthly benefit. Full benefits come later — age 65 to 67, depending on when you were born.

It's natural to wonder what age will give you the most bucks. You can work out a reasonable guess by using the calculator on the Social Security Administration Web site. Go to www.ssa.gov/retire2/breakeven.htm.

But there are more complex and more important issues involved. What other resources do you have, and when can you afford to retire? How's your health? How long do you expect to live? How well do you want to live?

For most people, the best path is to work out your own expectations and income figures, then call in a financial adviser to help develop your plans.

Young people face many more uncertainties, of course.

Once the baby boomers retire — the oldest are about to turn 60 years old — America may or may not be able or willing to pay vastly increased Social Security costs. Many workers don't have traditional pensions, and others may see them cut back or turned over to an already underfunded federal agency.

For that matter, government-supported health care may be in trouble, too. "If Social Security is a problem, Medicare is a train wreck," said Bobbie D. Munroe, a certified financial planner and owner of Fraser Financial in Atlanta.

Curiously, as the problems get more intractable, the advice gets more straightforward: Do it yourself. "If you are a young person in America, you just have to assume that you are going to be responsible for your total financial support," Munroe said.

"If I'm wrong," she added, "you're going to be in better shape. If I'm right, you're going to be protected."

Her advice is to start saving and investing 10 percent of your income. She means 10 percent of your gross pay, before deductions for taxes and all your other deductions. And she means starting right now, no matter what your age or income.

"It will never get easier than when you're young," Munroe said. "Sure, you're not making much money. But you don't have a family and you don't have a mortgage. Later you will have all that and dancing lessons and car pool expenses."

The trick is to concentrate on things you can control, said Fran Kinniry, a principal in the Vanguard Group office that develops investment advice for the company's many financial planners and advisers.

"Two things that investors can definitely control are how much they save and what they spend for their investments," he said.

One of the things they can't control, he added, is the solvency of the Social Security system two or more decades into the future.

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