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income, they don’t even believe the program will still exist by the time they would need it!

How do you personally feel about social security and Medicare? Putting these programs into proper perspective will dramatically affect how you look at your retirements and what your needs will be. Because, let’s face it, people today are far more concerned with their retirement than their counterparts were 20 or 30 years ago. So, before we look at the best ways to help fund your retirement, we consider how we should view these programs and if you should even count on them to help you during your retirement.

The main questions you should be asking yourself are: what exactly are the social security, Medicare, and Medicaid programs; who qualifies; and how does someone qualify? Throughout this chapter, we look at these three different government programs and discuss how they will affect your life and the lives of those around you, such as spouses and dependents.


Social security was created in 1935 by the Social Security Act of 1935. The act created a basic retirement program for working Americans, no matter what their income was. It also established many other social pro- grams, all of which are administered through the Old Age, Survivor’s, Disability, and Health Insurance (OASDHI) program. These other social programs include supplementary social income (SSI), Medicare, public assistance, welfare services, unemployment insurance, and pro- vision for black lung benefits. While all of these programs are essen- tially dealt with under the same roof, we will only be discussing the old age (retirement), survivor’s, and Medicare portions of the act since they have the most relevance on retirement and financial planning. The pur- pose of social security is to provide a guaranteed income floor for retired workers, so that they may enjoy a more comfortable retirement lifestyle. It was designed to complement the retirement pension plans that workers were offered by their employers. Therefore, Social Secu- rity functions mainly as a government-sponsored retirement plan.

In order really to understand how the system works, and then to generate a prediction as to whether the program will be around to

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