How TO Cope With The Fact That Social Security Is Already In Deficit In 2010

The Social Security Trustees published a report in August 2010 forecasting the program will be solvent until 2018. However, in October 2010, the Treasury Department revealed the Social Security program is already deeply in red with outlay exceeding payroll tax revenues by $76 billion in 2010 alone. Many have predicted the Social Security will be insolvent in the future, but no one saw it is coming this year.

Politicians and policy makers have long been trying to fix this problem, but only see it getting worse. In this weak economy and high unemployment rate, and more baby boomers are retiring, this can only be getting worse and worse and quicker and quicker. Americans need to rethink their approach toward retirement planning and savings.

Traditionally, a retiree expects one-third income from retirement savings such as pension, 401K and IRAs, one-third from personal assets such or investments in stocks, bonds and savings, and one-third from Social Security retirement benefit. However, the Social Security benefit might not be there when he or she retires. Here is how Americans should do.

Americans need to discount or disregard the Social Security Income when calculating retirement income and planning for retirement. Every tax paying American receive an annual benefit letter from the Social Security Administration stating his or her benefit. He should discount the benefit at least 50% or more. Chances are the benefit will still be there but it will be a lot less. Americans can not count on the politicians and policy makers to save it, but they will at lease make it on life support. A retiree will be not shocked and be ready when receiving benefit that is less than what he is expecting. It will be a joyful surprise if it is more.

Americans should do what politicians and policy makers fail to do: save more and cut spending. Starting to look for ways to cut expenses and contribute more to the 401K and or IRAs. Americans should take Uncle Sam out and take care this themselves. They should get educated on investing and retirement planning. Making sure to have proper asset allocations and maintain investment strategy throughout economic cycles.