If you thought it was tough financially on seniors the past few years, it was nothing compared to the drought following the Great Depression in 1934.
More than half of all seniors back then lived in poverty and often went hungry.
In 1935, our government came to their rescue and adopted Social Security. In the beginning, Social Security was a single lump sum payment instead of the lifetime monthly check today. The first ever recipient of social security worked a single day and paid in one nickel; retired the next day and got back 17 cents!
The first person to receive lifetime monthly payments was Ida Mae Fuller, who began to collect benefits on Jan. 31, 1940, on her 65th birthday. Ida Mae had paid into Social Security a total of $24.75 and her first check from Social Security was $22.54… and she lived until age 100. During her lifetime, she collected $22,888.92; that was a pretty good annuity investment for her!
In addition, the work force is changing. In 1940’s there were 42 "workers" for each "retiree." During Elvis’ generation of the 1950’s, the ratio had dropped to 16-to-1 and as of 2010, there are less than 3 workers per retiree recipient. Obviously our friends in Washington are going to be looking to increase F.I.C.A. income taxes (in case you’re wondering, FICA = Friends I Cannot Afford).
Uncertainty creates unique opportunities for you to inform and educate you clients and prospects about tax advantaged solutions for their retirement planning. Lifetime Monthly Income is more desired by baby boomers than wealth accumulation is.
Having an institution such as a bank or an insurance company standing in the breach between financial success and failure is paramount. Just ask your best prospects how they feel about their future monthly income and then enlighten them with the Real World challenge and your pitch perfect income solutions. Even Elvis would have been proud.
Even Elvis Presley had a Social Security account; and, last year, according to Social Security, "Elvis" dropped off the list of the top ten most popular names for baby boys, thus ending a reign that began in 1955.
Today Social Security is in a precarious position. Without changes immediately, it will not be able to pay out the benefits promised to retirees.
It’s not a political problem but a math problem. In 1935 when Social Security began taking F.I.C.A. withholdings, the average life expectancy for a male was age 60 and age 64 for a female. Yet Social Security payments didn’t begin until age 65. Today life expectancies are nearer age 83, yet Social Security begins at age 67 at the very latest. Life insurance illustrations are run up to age 120.