Social Security shortfall no reason to panic

In case you hadn’t heard, Social Security just announced that it expects to have a $46 billion deficit this year … down slightly from the $49 billion shortfall in 2010. And the trust fund is expected to be depleted by 2036, a year earlier than previously thought. Such a forecast is of course disturbing, especially when you consider that the Federal deficit will be deep in the red as far as the eye can see. And right after the Trustees’ Report came out I heard a headline-grabber say that all Boomers should start taking benefits as soon as they turn 62, before the government runs completely out of money! Such general statements are irresponsible. First of all, when to take the benefit is a big decision that should be based on many factors, including current income, current expenses, your health and survivor needs. And taking the benefits before you really need them could cost you big time down the road. In fact, your benefit increases by approximately 7 percent each year you delay taking it from age 62 to 66 and by 8 percent a year until age 70. That could be a better return than you’re getting on your investments. And second, government is not going to cut Boomers’ benefits. They’ll do what ever is necessary to keep the checks flowing. I wouldn’t be surprised, though, to see those of us with higher incomes paying tax on more of our Social Security benefits. So before you let the media send you into a tizzy that causes you to make rash emotional decisions, do your homework. The Social Security web site has a bunch of useful tools to help you out. But if you’re still confused, by all means meet with a financial advisor for a second opinion. Best wishes, George