Come 2034, incoming revenues will be enough to pay about 76% of scheduled Social Security benefits, a 2020 Social Security Administration trustees report predicts.
Given that, how might different generations plan for this? Should they plan for a 24% decline in their scheduled benefit? Should they not factor Social Security benefits into their retirement income plan at all? Or might they do something else.
“Though I think it far more likely that some combination of reforms will eliminate the need for cuts of the magnitude the trustees report suggests, people should be aware of the impact a cut would have on their overall financial situation,” says Joe Elsasser, a certified financial planner and president of Covisum.
What are some of those reforms? Tax increases, benefit cuts or a combination of both are the oft-mentioned reforms. But to date, there seems little to no interest on the part of lawmakers to tackle the coming shortfall between incoming revenue and scheduled benefits.
What to do then? “The implications with Social Security’s solvency tend to fall on generational lines,” explains Marcia Mantell, a principal with Mantell Retirement Consulting.
She agrees with Elsasser that Social Security beneficiaries and would-be beneficiaries ought to consider the following actions:
Baby boomers: On target
Social Security benefit estimates for those born 1946 through 1964 should be on target and will be unlikely to be reduced if Congress fails to put a solution in place…