We hear a great deal of talk these days about the state of Social Secu­ri­ty, Medicare, health insur­ance, and count­less oth­er areas which the gov­ern­ment has influ­ence over.  For some, this dia­logue caus­es great unease and often times fear. 

Ques­tions arise such as:

“How will I pay for health insur­ance if I retire?”

“Will I run out of mon­ey with­out Social Secu­ri­ty?”

Let’s make Social Secu­ri­ty our focus this month.  With the secu­ri­ty blan­ket feel­ing less than secure, here are a few con­cepts that might set you more at ease regard­ing its cur­rent sta­tus.

Many retirees are upset that while they see ris­ing health care prices and high­er prices at the pump, their Social Secu­ri­ty ben­e­fit has not gone up in 2 years.  Unfor­tu­nate­ly, the cost of homes and auto­mo­biles has elim­i­nat­ed cost of liv­ing adjust­ments, while the actu­al expens­es many retirees incur have gone up.  It is impor­tant to keep in mind that in 2009 we saw one of the largest cost-of-liv­ing increas­es in his­to­ry, at 5.8%.  Since prices have gone down and up since then, cur­rent pay­outs are not far at all from where they should be.

For cur­rent retirees, the fear of the Social Secu­ri­ty sys­tem run­ning out of mon­ey is a bit unwar­rant­ed.  With reserves, there are at least enough funds for pay­outs to last until 2037.  That gets boomers turn­ing 65 this year to age 91 before pay­outs would be in jeop­ardy.  With a ben­e­fit reduc­tion of 25% in 2037, the amount paid in by wage earn­ers each year would be able to sub­si­dize retirees until at least 2084.  Most of us out there shouldn’t have to wor­ry much beyond that.

Giv­en pol­i­tics in this coun­try, it is like­ly that lit­tle will be done to rem­e­dy the issues fac­ing Social Secu­ri­ty any­time soon, so it is good to know that the cur­rent pro­gram should be able to con­tin­ue pay­ing out ben­e­fits for anoth­er 70+ years with minor mod­i­fi­ca­tions.

Thank­ful­ly, like many things, there are many strate­gies that can be used to rem­e­dy the issue when we do final­ly get around to it.  In our Pros­per­i­ty Plan­ning® process we ask clients to choose between ear­ly retire­ment, greater trav­el goals, high­er estate goals etc…  With Social Secu­ri­ty we can grad­u­al­ly raise the nor­mal retire­ment age (since we are liv­ing longer, health­i­er lives), increase the ear­ly retire­ment age, or raise the annu­al income lim­it for work­ers pay­ing into the sys­tem.  We adjust finan­cial plans accord­ing­ly so clients can live the best life pos­si­ble and there is no rea­son we can­not treat the Social Secu­ri­ty sys­tem in such a way that it has the best life pos­si­ble as well.

As with any finan­cial deci­sion, we always urge that you speak with your finan­cial advi­sor.  Some bad deci­sions can be undone, while oth­ers can mean a life­time of liv­ing with con­se­quences.  Per­haps the best strat­e­gy for max­i­miz­ing your ben­e­fit is to breathe eas­i­ly and employ the right peo­ple to assist you in mak­ing the best finan­cial deci­sions pos­si­ble.

Have a most hap­py and pros­per­ous 2011!