What challenges exist in the traditional retirement system driven by social security?

The traditional retirement system, particularly the reliance on social security, faces significant challenges. One of the primary concerns is the sustainability of social security funding in the face of increasing life expectancy and demographic shifts.

As the population ages, the number of retirees grows, while the working-age population that contributes to social security diminishes. This imbalance leads to a critical funding challenge, as more money is paid out than comes in.

• The depletion of social security funds is projected to occur by 2034 unless meaningful reforms are made.
• Many individuals expected to rely on social security often find that it provides insufficient support for a comfortable retirement, as it was never intended to be the sole source of retirement income.
• Inflation further exacerbates this issue, as the purchasing power of fixed social security payments diminishes over time.

These challenges underscore the necessity for individuals to proactively save and invest, rather than relying solely on government assistance for retirement.