Retirement Planning

By Karl Edmunds:

As beginners to the journey of seniorhood, many wonder, including me, whether our continuous contributions to the Social Security program will payoff with something reasonable. Is our pessimistic views founded on facts or emotions? Let’s take a look…

First you must decide which source of data is most accurate. This is a serious challenge. Media tend to refer to “intermediate” projections prepared by the Social Security Trustees Report. In addition to the “intermediate” estimate the report also forecasts a “low end” projection and a “high end” best case scenario.

Aren’t the Trustees the guardian of our funds and therefore most attuned?

The competing data source is the Congressional Budget Office(CBO). They forecast a depletion date as well based on various assumptions. And that is the catch. The volatility within our economy makes it almost impossible to get a forecast you can bank on.

The surest consensus that exists among both forecasting groups is the fund will run out of funds if nothing is done to prevent it.

The latest estimates suggest the fund will be depleted by 2037 which four years sooner than projected earlier.

HOW TO HAVE A GREAT RETIREMENT

These ominous forecasts are not only affected by economic conditions but our own increasing life expectancy, a growing population of elderly people, fewer contributors, cost of living increases to recipients and deficit spending by the government.

Each person must decide whether promises that changes within Medicare and Medicaid programs among other health care initiatives will be realistic sources of funds to avoid a collapse of the Social Security system as promised by the politicians.

Historical actions to shore up Social Security involve some combination of raising taxes and reducing the benefits paid. And some combination of these two fixes will no doubt hit us in the future.

Social Security Trustees are advocating a permanent increase in the payroll tax of roughly 2% or a benefit decrease of approximately 13%. They project the fund will be fiscally solid for the next 75 years. That all sounds good except that 75 year projections have never been accurate.

There are strong independents that advocate some form of privatization of the program. This approach was more seriously considered prior to the most recent economic turmoil in the stock market.

Politicians will continue to use the depleting Social Security fund as a way to gather votes at election time but the facts are the horizon of absolute crisis is still several years away. The bigger danger is government being forced to use larger and larger portions our Social Security dollars to deal with rising health care costs.

Your pessimism is not unfounded. A good retirement plan should prepare alternative financial income strategies in case an unexpected crisis overwhelms the resource of the Social Security fund. It is a high probability mistake to anticipate Social Security income as a primary income source. It was never meant to serve that purpose in the first place. Set a plan that allows whatever Social Security comes as play money that can be used just for the fun of living.

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About The Author:

For more than 20 years, Karl Edmunds has been a noted author within the business and management consulting arena. As a senior, he now engages his curiosity and observations about life to write about key issues of importance to the growing community of seniors (Boomers), and the value of living life to the fullest every single day. Give me your comments and suggests at http://Plan-Retirement.org or http://For-Seniors.org