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"A poorly planned retirement can result in financial tragedy." -Persuasive essay

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Aug 6, 2011   #1
3. Assignment: Persuasive Essay Final Paper

Thesis: A poorly planned retirement can result in financial tragedy.

Americans today need to plan for retirement that extends beyond social security. Many reports have shown that social security funds will run out in the year 2036. Social Security may not even be available to Americans in the near future for many reasons. For example, budget restrictions, a bad economy, declining assets, stocks, 401Ks, IRA's, and inflation.

For the past few decades, many Americans believed that they could rely on Social Security for their retirement plans. When the Great Depression happened, President Roosevelt saw a lot of Individuals not working and witnessed many of the nation's elderly with no money to retire, (Harmon, 2011). As part of the Roosevelt's New Deal, the Social Security program was to make sure this level of poverty cannot happen again for any worker who had paid into the program. Payroll taxes are what fund this program. After a certain percent of a worker's paycheck is taken out, it will go directly into the fund that that provides benefits to current recipients. When law makers first implemented the Social Security program in 1935, they set it up to have the working individual pay into a fund to help the aging Americans that are too old to work. For many years, this philosophy has worked well.

The average number of children per family in 1935 was 3.6, and today that average number has dropped to 2.6. The current birthrate is the lowest on record, (Williamson, 2010). There are many reasons for the drop in the current birthrate. Women are waiting longer to have kids and by doing so they do not have many children. In addition, many of these women started to use the pill in 1960 when the FDA approved the first birth control pill (About Abortion, 2011). Another reason could be, that in 1973 abortion became legal in the United States. There are estimates that since that year, 46 million abortions have been performed. (DeNoon, 2003).

Today, more Americans in the Baby Boomer generation need social security since many have reached retirement age. Other Americans are unable to support the Baby Boomers through social security because of the lower population of younger Americans. More Americans will be leaving the workforce while fewer individuals will enter to pay into Social Security. Not only are fewer people replacing Baby Boomers, this generation is also living longer than the previous one. "The average life span in the 1930s for a male was 58 and 61 for a female, and today it has increased to 76 for males and 82 for females," (Average Life Expectancy, 2006). The retirement age will need more resources than the previous generation.

The average life expectancy has risen at a rate of about two years per decade since 1840. Some experts are staying that by 2056, the average life expectancy will be 100 if that individual has access to good health care. Many reasons to this will be because of many medical and public health achievements that include vaccination against diseases, control of infectious diseases, improvements in motor-vehicle safety and workplace safety, improvements in food safety and better education of preventative health care. (Salynn, 2008).

The economy is a major issue that is affecting Social Security. The work force is the prime source for funding this program. When the economy is poor, many people that would be paying into the system to help fund Social Security are left without a job. The current employment rate is a little higher than 9%. The unemployment rate has averaged 5.7% from 1948 until 2010. The highest rate of 10.8% was recorded in 1982 and the lowest rate of 2.5% was recorded in 1953. The number of people employed plus the number of individuals unemployed but seeking work equal the work force, (United States Unemployment Rate, 2011).

Higher unemployment creates a trickle effect since many of these individuals are going to collect unemployment. Unemployment Benefits is another program in the United States Budget that takes away from Social Security. In our current situation, the government needs to work on ways to help the economy grow and get more individuals back to work. Democrats in Congress passed a $787 billion stimulus bill in February of 2009. Many economists believed that this package helped the United States from going into a deeper recession, (Economic Stimulus, 2010).

"From the Congressional Budget Office this year and next, Social Security will pay $187 billion more than the government will collect," (Beware of Raids on Social Security, 2011). Our government is spending our money before they even receive it. As a result our Social Security program is increasing the national debt to dangerous levels by depending on destructive borrowing to fund the program. An article from USA Today states, that the US is borrowing $4 for every $10 it spends.

As a whole the US government is in extreme debt. In recent reports, the debt has reached the "debt ceiling", and is the top priority in congress. The American government has many different points of view on how to fix the budget crisis. However, the United States is far from coming to an agreed solution.

Another reason for planning better for retirement is inflation. The rate in which prices of goods and services rise and measured against a standard level of purchasing power. The most current rate for June 2011 is reported at 3.6 percent. The average inflation rate between 1914 and 2010 was 3.38 percent, (United States Unemployment Rate, 2011).

An inflation rate of 2-3% is an ideal for most countries' central banks. (investopedia.com/terms/i/inflation.asp) Since the United States has seen a high inflation rate in the past few months, we can expect our goods and services to go up in the future. With high prices for goods and services, American will need to spend more money for essentials. Since goods in the future will cost more, it is very important for Americans not to just rely on Social Security that may not be there when they reach the age of retirement.

About Abortion. (2011). Prolife Action League. Retrieved on July 31, 2011 from prolifeaction.com
Average Life Expectancy: Measuring Yours. (2006). Harvard Health Publications. Retrieved on July 31
from healthharvard.edu

Beware of Raids on Social Security. Disguised as Economic Stimulus. (2011). USA today

Boyles, Salynn. (2006). Americans Living Longer than Ever. Web MD Health News. Retrieved on July 31, 2011 from webmd.com

DeNoon, Susan. (2003). Birth Control Time Line. Retrieved on July 31, 2011 from medicinent.com

Economic Stimulus. (2010). NY Times. Retrieved on July 31, 2011 from topics.nytimes.com

Harmon, Jane. (2011). What is Social Security? Retrieved July 31, 2011 from wisegeek.com

United Sates Unemployment Rate. (2011). Retrieved on July 31, 2011 from

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