Can you retire early?

Any one who took a recent look at the CNN Money site to determine if they could retire early was in for a shock. You're going to need to save a lot of money each year to afford to retire with 80% of your current income coming in on a regular basis.

Many people are counting on Social Security, but it only provides 40% of the average retiree's income according to a Daily Finance article.

With the recent government announcement that the Social Security trust fund is set to run out in 2037, four years earlier than previous estimates, many young workers are asking themselves: Why am I paying into a system that might not be there for me when I retire?

The entire premise of the Social Security system is that the current generation of workers will be able to fund current retirees’ benefits. But because of shifting demographics and the added stress of the recession causing baby boomers to retire early, in 2016 the benefits being paid out will start to exceed the amount being taken in.

Even more troubling, the Trust Fund is nothing more than IOU’s: the Social Security funds were NEVER invested in real assets ranging from stocks and bonds to mortgages and other financial instruments. The Social Security trust funds are  ”invested” in a special type of Treasury bond that can only be issued to and redeemed by the Social Security Administration

HERE IS THE PROBLEM:  The funds needed to ‘redeem’ those IOU’s are the same tax revenues needed to pay for defense, Medicare, Federal employee’s salaries and benefits, and a host of entitlement programs.

“It’s very much a Ponzi scheme where the next generation will get stuck holding the bag,” says Laurence Kotlikoff, author of The Coming Generational Storm and a longtime advocate of reform.

The baby boom generation “has seen much of its retirement savings wiped out at a point when it’s too late for many to recover. So the new context is, the elderly are going to be the fastest-growing poverty group in the United States...,” says Phillip Longman, author of Born to Pay: The New Politics of Aging in America and a senior fellow at the New America Foundation.

What can you do? Do what I did years ago:  By starting and operating a commercial cleaning company, I can retire without worrying about Social Security reductions. My company has many clients: I may lose some but gain others: it is virtually recession-proof!

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