Wednesday, August 19, 2009

Long-term Viability of Social Security in Retirement Planning

After reading my previous post, several people asked about the wisdom and validity of assuming Social Security benefits in retirement income assumptions. They probably have a good point, given that just today Congressman Bachus expressed his concern that Social Security could be insolvent in two years and that the situation there is much worse than anyone knows. I based my previous post on the assumption that Social Security rules would remain largely unchanged into perpetuity, which is unlikely. I fully expect those who plan for their future will have their benefits reduced through mechanisms such as means testing in favor of those who do not adequately plan for their retirement. While we will all have the privilege of paying into the system, those who've accumulated even a modest degree of wealth will received reduced benefits compared to what they paid in. So my advice to anyone concerned about the future of Social Security is to plan your retirement with the assumption you will receive no benefits.

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