And don’t forget that you may not be able to rely on Social Security the way that today’s retirees do. The program will require an overhaul to keep its coffers filled for the future. In fact, if you’re 10 years or more from retiring, it may be better to not even figure Social Security into your retirement planning.
For the sake of extreme caution it isn’t a bad idea to plan for an eventuality where Social Security benefits are slightly lower than currently projected. There are politicians currently pushing for some cuts and if nothing is done in 20 years the trust fund will run out. But even in that worst case scenario Social Security will still be able to pay out 75 percent of expected benefits to seniors for a century.
While I believe future politicians wouldn’t allow a significant benefit cut for such an important voting bloc, it is at least possible within our current system.
On the other hand, a future where Social Security is completely eliminated would require the country to take a profound dystopic turn. It is just unbelievable that a democracy with a functioning economy would needlessly eliminate the most popular government program, plunge a huge segment of the population into crippling poverty, and tank the economy.
If you actually try to game out how such a radical change could happen it is really only conceivably if there is a coup, massively destructive war, incredibly ecological devastating destroying our productivity, a zombie apocalypse or a combination of all of the above.
Of course any of the dystopic set of events that would lead government to completely eliminate Social Security should be equally destructive to their other standard retirement suggestions, like having a diverse IRA. An American government eliminating Social Security is likely one with a plummeting stock market and a junk bond credit score.
If you honestly think there is a real chance that Social Security could be completely eliminated in the near future the proper planning isn’t to buy more bonds, it is to flee to New Zealand, or buy a cabin deep in the wilderness stocked with bullets and hardtack to survive the nuclear winter.
Photo by Haegglund, used under creative commons license