Social Security has been a financial foundation that millions of retirees simply couldn’t do without. More than three out of every five retirees count on the program for at least half of their monthly income. But this guaranteed payout is in some serious trouble according to a report released by the Social Security Administration Trustees this week.

By 2034, it is expected that the $2.9 trillion built up since the reforms of 1983 are expected to be completely gone. The only way the program cannot go bankrupt is by tweaking the existing payout schedule. The Trustees recommended that a 21% cut may be necessary to sustain payouts until the year 2092. This means that an across-the-board cut in benefits will push the average payout down to just $1,115 a month, from $1,412. The other option is to raise the full retirement age, the age when one become eligible for 100% of retired worker benefit, as determined by the birth year.

Either way, something has to be fixed in order for those of us in our 20s, 30s, 40s and 50s to get something from social security for all the years we have been and will be putting into funding the current retirees. However, the likelihood of reform occurring anytime soon appears to be slim to none. Why? Because neither the Republicans or the Democrats want to go anywhere close to touching this sensitive topic. It almost surely will get them voted out of office.

Future Wealth’s View

As much as it hurts to see a portion of our paycheck going towards social security every month year after year with the knowledge that the pot could be empty when it is our time to dip our hands, our advice, at Future Wealth, to our clients has always been to not count on this income, whatever it may be, when they retire. Instead, we choose to model out what we think our clients will need to save up to sustain the lifestyle that they need through their retirement years. Through this model, we come up with a number that our clients need to save up to ensure a secure retirement.

The kicker in this modeling is that one’s lifetime is no longer 60 or 70 years and barring any unexpected event, most of us will likely live to be 90 years or maybe even longer. Planning for 25 years or more of retired life is neither simple nor is it unavoidable. While we can ponder till the sun goes down if social security will be around when we retire, our advice would be stop dreaming, stay awake and do what is needed to ensure happy retirement years.