Earlier this month, the trustees of the Social Security and Medicare Funds announced that the funds are now spending more than they are taking in. It has been known for over 30 years that taxes would not cover the benefits as the population aged. In the 1980s, taxes were raised to a level that would produce a surplus, and the surplus was "invested" in government bonds. By 2010, benefits exceeded the taxes, and interest on the bonds was drawn down. Now the taxes and interest will not cover the benefits, and the funds will disappear in the future. In order to bring the funds to solvency it would require a 21 percent reduction in benefits if action is taken this year.

The problem is even worse than the trustees project because the drawdown of government bonds must be paid out of other government funds or more borrowing. As time passes the pressure on government finances will only increase as the population ages and retirees are not replaced by young workers paying taxes. At the same time politicians refuse to touch the "Third Rail" of Social Security reform. When the day of reckoning arrives, the 21 percent benefit reduction needed today will have ballooned out of control, probably through hyperinflation caused by massive government borrowing for benefits.

The day of reckoning could come all at once or slowly, a little at a time. Either way, you cannot trust your retirement to the government. But with a little savings and time you can replace your lost Social Security. For example, if you worked for 40 years at an average of $5000 per month and then retired at age 66, you would receive a benefit of about $2000 per month, or about 40 percent of your wages.

Now suppose instead that you worked for 40 years at a $5000 per month salary and that you saved enough to match your 6.2 percent Social Security contribution and invested in equity mutual funds. Based on the historic average market yield of 6 percent per year, your 6.2 percent, $310 per month saving would grow to about $310,000 at age 66. You could earn an average of $1550 per month, about 75 percent of your Social Security benefits payment, and still have your $310,000.

Finally, suppose you live 20 years after your retirement. Your 20 years of Social Security benefits would total about $480,000 (before benefits reductions). The saver in the above example would have $372,000 in income plus the $310,000 principal, a total of $682,000. That's 142 percent of the Social Security benefit.

And just think what would happen if the 6.2 percent your employer pays for your Social Security was added in. Your 20 years value would double to $1,364,000, almost three times the Social Security benefit. Isn't it a shame that our government would be content to see you lose two-thirds of your retirement so that they can take your savings and "invest" it in government deficits? And that's if they actually pay your retirement benefits. No wonder they scream when reformers propose to "Privatize" Social Security.

So, yes, you had better think again about relying on the government for your savings plan. With our budget deficits and out-of-control national debt, your savings are too important to trust to the government.

Pay your taxes, as you must, but you must also take responsibility for your future and develop a savings plan.

Ron Allen is a Christian businessman, CPA and author who serves in local, national and international ministries, spreading a message of reconciliation to God, to men and between believers. He is founder of the International Star Bible Society, telling how the heavens declare the glory of God; the Emancipation Network, which helps people escape from financial bondage; and co-founder with his wife, Pat, of Corporate Prayer Resources, dedicated to helping intercessors.

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