Social Security shield we need from volatile markets

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By Kathryn Anne Edwards / Bloomberg Opinion

This month’s roller-coaster ride through the markets has been more frightening than exhilarating for many Americans, who have more than $44 trillion invested in retirement accounts. As a result, the internet has been flooded with financial advice, most of it saying some version of “Don’t panic.”

What almost all this advice is missing is a reminder that every working American has insurance coverage for exactly this type of situation. Saving for retirement has inherent risks, and losing money on investments (or losing money at the wrong time) is just one of them. Luckily, this insurance coverage has an enviable track record and provides nearly all policy holders a minimum level of economic security and independence in old age.

It’s a government plan called Old Age Insurance, better known by the umbrella program it falls under: Social Security. And during times like these, it’s reassuring to know that it is not an investment, should not be an investment, and serves its purpose extremely well.

In terms of insurance, Social Security is the most valuable policy most people hold. Workers pay premiums via a payroll tax on earnings (6.2% up to a cap, matched by employers) to gain coverage for themselves, their spouses and their dependent children. It protects against three risks: dying, becoming too disabled to work, or becoming too old to work. Benefits for children last until they come of age, while benefits for spouses or workers are for life and are adjusted for inflation.

https://www.heraldnet.com/opinion/comment-social-security-shield-we-need-from-volatile-markets/

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1. Excellent article.

Social Security is old-age insurance. I point this out every time somebody starts rattling on about years to their break-even point (payments vs. premiums). The purpose of SS is exactly as described in this opinion piece. Recommended.