.
1. Social Security gives a poor rate of return. The rate of return varies from person to person. For instance, for the best case scenario, a married couple with two children and a single earner receives only 4.74 percent if the earner was born in 1932. However, most of us were not born in 1932 so that percentage decreases to less than 2.6 percent for those born in 1976. Single men do the worst when they only have a rate of return of less than half a percent. .
2. People are becoming more dependent on Social Security. Today, Social Security benefits are the primary source of income for almost two thirds of all retirees. .
3. People don't know their rate of return on their Social Security taxes. A worker has no clear understanding of the yield on his or her investment in the Social Security program. .
4. The trust fund is running out of money. By 2012, the Social Security trust funds are expected to start paying out more in benefits than it collects from taxes. Why? Because people are living longer, more people are retiring early, and women of today are having less children. Which means that there will be less people in the workforce to pay for the increasing number of retirees. .
(Transition: So now we know that it is not wise to depend just on Social Security when we retire. There are, however, other things you can do to better prepare yourself for retirement. I will focus on investing your money in private investments-particularly IRAs and Stocks) .
II. Satisfaction Step .
A. The IRA .
1. Only 6 people of the 19 surveyed knew what an IRA was. .
2. IRA stands for Individual Retirement Account .
3. Basically, what you can do with this type of an account is deposit a maximum of $2000 every year and you will earn interest on it. The earnings are also tax deferred, which means that you won't be taxed on the earnings until you withdraw it after you're 59 1/2 years old.* .
4. This is a long-term investment so you will be penalized if you take your money out before you are 59 1/2.
