Social Security: Planning for What Could Happen -

The airwaves seem to be alive with new concerns about Social Security’s impending funding crisis, with the March 31 publication of the annual Trustees Report suggesting that the date for full depletion of the program’s cash reserve could occur a year earlier than predicted last year. While many “insiders” believe that congressional action will stave off this draconian circumstance, financial planners are busy developing strategies to bake this possibility into their clients’ retirement cash flow projections. In a post on, Senior Columnist Kerry Hannon takes a look at some of the strategic counseling being provided, including an examination of how Social Security income impacts various generations of future retirees, from Baby Boomers to Generation Z. Read Ms. Hannon’s full post here

Quoting Brian Ellenbecker, a certified financial planner and financial advisor in Wisconsin, Hannon notes “When news like this comes out, as it did last week, we field questions from clients concerned if that changes anything for them, or if we need to adjust anything in their financial plans.” These adjustments, of course, are based on many factors ranging from individual clients’ age and proximity to retirement, as well as to the portion that Social Security plays in their overall expected financial picture. The claiming age for benefits also looms large in these discussions, Ellenbecker suggests, with much of the advice focused on the value of deferring claims as long as financially possible to take advantage of the delayed retirement credits available, under current law, between full retirement age and age 70.

Hannon’s post concludes with a description of the planning approach taken by one financial planning firm: don’t plan on Social Security at all! Simply put, if a future retiree has the flexibility–and the time–to plan a retirement income stream that excludes Social Security, the implications of a solvency crisis can be completely mitigated. Supporting this approach is the opinion of many–nearly 8 in 10 Generation Xers (those born between the years 1965 and 1980)–who cast doubt on whether Social Security income will be available to them when they reach that point.

The issue of Social Security’s solvency is active in Congress, as it has been for decades, but time is running out. This fact was presented loud and clear in the most recent Trustees Report and the wave of commentary following its release last week. As most folks who follow this slow-moving crisis are aware, the closer a solution moves to the projected date of insolvency, the more severe the corrections will need to be.

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