Reveled – the government is using outdated longevity models. This not my headline;
rather a Sunday’s New York Times’ headline from an article written by Gary King and Samir S. Soneji describing the troubling state of Social Security.
Many of points they raise are well known. For example in 2010 Social Security spent $49 Billion more than it took in. This was the first Social Security ran a deficit and the money was drawn out of the trust funds. Current government projections have the $2.7 Trillion trust funds running out in 2033.
Most startling is the revelation the government is using outdated longevity forecasting models.
“Remarkably, since Social Security was created in 1935, the government’s forecasting methods have barely changed, even as a revolution in big data and statistics has transformed everything from baseball to retailing.”
I had no idea the government Social Security projections are still base on the 1935 life expectancies! Come on it’s 2013, 78 years later. Perhaps they are all so busy staring at computer screens they have forgotten to look out the window to see the new reality of longer life.
It is no secret, people are living longer and medical science is projecting we may start living even longer. The largest growing population segment in the U.S. is Americans reaching the age of 100. Much of the retirement income planning I do addresses this problem and I have frequently written (How Lone Would You Live?) about increased longevity and its potential cost.
You can read the New York Times article in its entirety here Social Security it’s Worse Than You Think.
What does this mean? Unless we get a course correction Social Security is going to run out money sooner than currently projected.
What can you do to protect your retirement?
Make sure you have a good portion of your retirement dollars in properly reserved insurance plans that are designed to guarantee lifetime income no matter how long you live. Also make sure the income has potential to increase in the future to offset inflation or anyother unforeseen income reductions.
For help you may ask questions in the comments