Many people nearing retirement age have two big worries — will Social Security be enough to retire on, and will Social Security even be around when they retire?
The answer is “yes” to both questions.
In Ecuador, Mexico, and other Latin American countries, many U.S. expats are living well on what amounts to the average Social Security check.
Ecuador, for example is a true retirement haven where two people can live well on $700 per month, including food, rent, utilities, medical care, transportation, and miscellaneous expenses. (Ecuador was recently named #1 on International Living magazine’s 2009 Retirement Index.)
And Social Security should be there when future retirees need it.
Social Security provides 50% of the income for more than half of married retired couples in the U.S. today. And despite fears that the system is going broke, funding from workers’ payroll taxes will cover all retirees’ payments until 2016 even if no changes are made to the current program.
After that, the Social Security Administration can cover full benefits until 2037 by cashing in Treasury bonds from the Social Security trust fund. When the bonds run out, income from payroll taxes would be enough to cover about 75% of payments for decades.
That’s with no changes – the Obama administration is talking about a Social Security payroll taxes on income over $200,000 (currently, earnings over $106,800 are exempt). Other ideas include raising payroll taxes, raising the retirement age, or scaling back payments in some way.
But experts agree that drastic Social Security cuts are unlikely. Combined with safe, affordable destinations abroad, a comfortable social security retirement is still possible.
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