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“Social Insecurity?” Keep Social Security’s Role in Your Retirement in Context - Motley Fool
There is a lot of publicity these days about the possibility of Social Security running into some severe financial difficulties in the not-too-distant future. Some even mistakenly believe that there’s a danger of the program defaulting and disappearing. Much of this anxiety is induced by the recent release of the annual report by Social Security’s Trustees which forecasts that the Social Security trust funds will be fully depleted in about 2035, necessitating a cut in benefits for everyone. But if fear of the program going away is the source of your angst, fear not – Social Security cannot go “belly up” and stop paying benefits. The worst that will happen if the trust funds run dry in 2035 is that an across-the-board 20+ percent cut in benefits will happen (an unlikely scenario unless Congress totally fails to reform the program). While there’s no denying that a 20+ percent cut in monthly benefits would be painful to nearly all, it also puts emphasis on how Social Security should fit into your overall retirement plan. Social Security was never meant to provide all income needed in retirement. Indeed, the program is intentionally designed to replace a maximum of about 40% of pre-retirement income, which means that future retirees should also seek other ways to fund their retirement, including savings, investments, and potentially part time work. All of this is very well articulated in this Motley Fool article by Maurie Backman. Click here to read more.