Kelsey Ogle

Current college students may have to work until they die

The United States Social Security System is in great jeopardy.

The article “5 Alternatives to Social Security,” published on February 17, 2012, in the San Francisco Chronicle and available online at, reports that a recent study by the Government Accountability Office found that Social Security will start to run out of funds by the year 2036, mostly due to the fact that people are living longer and there is a high unemployment rate. The high unemployment rate is causing Social Security to have less money to give to its beneficiaries because the people who work now are funding the money that goes to current Social Security beneficiaries.

Students may be wondering how much the Social Security deficit will affect them. Keep in mind that if Social Security does begin running out of money and is becoming nonexistent by the year 2036, people who are now between the ages of 18 and 44 will be between 41 and 67 years of age 24 years from now when it is 2036.

However, Social Security was never intended to serve as the only source of income for retired people. Social Security only replaces about 40 percent of an average worker’s income, but retirees really need 70 percent or more of their previous income to be able to enjoy financial comfort during retirement. In order to continue receiving enough income to live comfortably, retired people need to utilize investments, savings and private pensions.

Here are seven alternatives to relying on Social Security when you retire:

  • 401/401(k) Plans—These plan are great because you can get free money from your employer, lower your taxes and increase savings and earnings without bothering to make deposits. You should be able to put up to 15 percent of your salary into your 401 or 401(k) plan every month, but your employer can limit the amount of money you can add to the account each month. The money you put into the plan comes out of your check before taxes. All this means steady income after you retire.
  • 403/403(b) Plans—These are retirement plans that are similar to 401 and 401(k) plans. The main difference is that 403/403(b) plans are offered by nonprofit organizations, like universities and charitable organizations, and 401/401(k) plans are offered by corporations.
  • Live Somewhere Cheap and Save More for Retirement—Every year, lists of the most affordable cities to live in the United States are released. Smaller towns, like Modesto, California, and college towns, like Tuscaloosa, Alabama, home of the University of Alabama, make up most of the places on the list. Also, putting the maximum amount possible into retirement accounts will help you save more for retirement.
  • Save More Wisely—Find prudent ways to preserve and grow your wealth. This can be just as important as saving extra money for retirement.Making low-cost investments can really add up over the years. Making investments that have higher returns can be a good option if you are a younger investor because you can probably handle more risk in your investment portfolio.
  • Spend Less While Working—Saving money by doing small things like carpooling to work, eating at home, going to the movies when prices are discounted, using coupons and buying store brand groceries can save you a great deal of money. Saving on big ticket items like homes, cars and vacations can leave even more funds for your retirement.
  • Work Longer–Although this is not a viable option for people who have labor intensive careers in fields such as construction, public safety and farming, those who are employed in service industries often stay intellectually healthy well past the usual retirement ages of 65 to 67. Formalizing a hobby can also help you ear some extra income before and during retirement. For example, a person who is very skilled at knitting can knit clothing and accessories and sell them for a profit.

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