CNBC laid out a path to Social Security essentially malfunctioning in the next few months in a manner that could effect new enrollees or people claiming a survivor benefit. The causes are attributed to personnel cuts and systems issues related to changes currently going on in government. Could the article actually be correct? I have no idea and if you don't work at the SSA, you probably don't either.
If your reaction is to blame a politician or political party you've come to the wrong place. The focus here is on personal resiliency in the face of something negative. Regardless of the right/wrong of it or whether the article and the people quoted in the article are correct or not has nothing to do with what any of us need to do in case something happens with our current or expected payout.
As Barron's noted, Congress would need to vote on a straight out cut in benefits, one person quoted called the personnel and systems issues a "backdoor cut."
There has been visibility for something along these lines for many years pointing to the 2034/2035 time frame when benefits would need to be cut by 21-23% if Congress doesn't take some sort of action. There is no reason for a potential, adverse change to catch anyone unaware. Hopefully it never happens and hopefully it doesn't happen so much sooner than had been forecasted but the threat is that something bad does happen not that everything goes exactly as it should.
In terms of preventing or solving our own problem, how much of a problem is it for you if something goes really wrong with Social Security? My wife and I could make it work but it would be far less comfortable in terms of margin of safety.
How long can you earn an income? Here, I'd change the framework from retire/not retire to doing something that brings in some money every month. This could mean a second career, some sort of part time gig related to your primary career, monetizing a hobby or any one of a hundred other ideas that could be floating out there. A retiree needing $60,000 year in today's dollars to live the life they want would benefit immensely from some sort of vocation that brought in $15,000-$20,000.
Is there a way to lower your expenses? Our biggest monthly expense is the mortgage on our rental. It's $1500/mo and will be paid off right after my 66th birthday. Could the math work in your favor for downsizing your house? This may not quite be the no-brainer it used to be but selling a mortgage free house for $600,000 and buying a $350,000 house for cash could be a great outcome in the right circumstance even if not in every circumstance.
I've been talking forever about cultivating my volunteer fire department experience into a backup gig if I ever needed to rely on it. I went out on just one fire last year. I was surprised to not get called more and wondered if I stepped in it somehow but they want me back this year. I'm going in two different directions with this. My hope is to never need this income stream but instead to be able to fill in to several different slots where/when needed when incidents happen in our county.
In the next couple of years, our department will need to upgrade at least one of our water tenders (water trucks that carry 1500 up to 4000 gallons). A new one could go out on fires which is another revenue opportunity for some firefighter, maybe me. The one we get won't be this cool but you get the idea here of digging all the way in to something and playing a long game of cultivating your own opportunity in case you need it.
What in your life interests you as much as wildland fire does me? Is there anything you can devote time to because you want to that might then help you out if you need it? In the meantime, hopefully you're having fun along the way as you do cultivate your opportunity.
Part of this equation for me is always going to be taking care of health and fitness as best as we can. For me that means a low carb diet and lifting weights along with a couple of other things that I think are important but have less impact than not having metabolic syndrome (benefit of low carb) and gaining all the benefits of maintaining muscle mass. I'm not saying anyone needs to draw my conclusions on this point but I am saying it is in your interest to figure something out to try to stay healthy for financial reasons, quality of life and optionality.
I'll close this by repeating a very obvious point from past blog posts which is that no one will care more about your outcome than you. I feel fortunate to have come to this conclusion a long time ago and managed accordingly.
The information, analysis and opinions expressed herein reflect our judgment and opinions as of the date of writing and are subject to change at any time without notice. They are not intended to constitute legal, tax, securities or investment advice or a recommended course of action in any given situation.
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