A perfect storm of eroding Social Security trust funds, high unemployment and a flood of Baby Boomers all hitting retirement age at the same time will put enormous strain on Social Security for the next two decades, forcing retirees and their advisers to come up with alternative retirement income plans and strategies to make ends meet.
The Social Security Board of Trustees in its annual report to Congress warned that current Social Security trust funds will be exhausted in 2036, one year earlier than it predicted just last year.
More concerning, the board now predicts that in 25 years, the pool of Social Security funds available will only pay 77% of the benefits due to recipients even though more than half of pre-retirees are counting on Social Security to be their primary source of income in retirement.
The sobering data suggests pre-retirees, especially Baby Boomers, and their respective financial advisers will need to develop more comprehensive retirement planning and retirement income strategies using a combination of personal savings, annuities, mutual funds and defined benefits programs and assets to ensure Americans have the savings they need to enjoy a reasonable retirement.
â€œAs Americans look to secure their financial future, the guarantees that only an insured retirement strategy can bring will become even more apparent,â€ said Insured Retirement Institute CEO Cathy Weatherford.
Larry Barrett writes for Financial Planning.