Thursday, February 16, 2012

Social Security May Fail Sooner Than We Think

Seal of the United States Social Security Admi...Image via Wikipedia
Every year the Social Security Trustees Report gives a status of the fiscal state of our Social Security system. Last year it was reported that the trust fund would likely run out of money in 2036. Dailyfinance.com says this years report offers a much worse picture at "Social Security Is Failing Even Faster Than We Thought"

The current report states by the end of the decade the trust fund would be $800 billion dollars smaller than last years projections. This adjustment means Social Security would run out of money in 2034, two years sooner.

The table shows the difference between the SSA projections and this years Congressional Budgets Office projection.



The chart shows the trend over the last 5 years:


When the Trust Fund runs out of cash in 22 years, benefit payments are expected to decline. At that point it is assumed by many experts we will see a reduction of the average Social Security check to 75% of its original amount.

What to do about a reduction in Social Security?

It all depends on your age and how far away you are from receiving your 1st check. You still have 22 years to prepare for this event. It's time to start saving if you haven't already or increase saving to accumulate a bigger nest egg. 

We are receiving more and more data concerning the inevitable demise of Social Security.  The press and others have been saying the sky is falling for many years. But now the problem is really just around the corner and will be here soon for those in their 40's and 50's. They will be the first to experience the reduction in payments by Social Security Trust fund, yet there is still time to prepare.

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