Wednesday, May 17, 2006

If Not Pensions...Social Security??

The PBS special “Can You Afford to Retire” which aired last evening provided a pretty discouraging glimpse of the future for retiring boomers. One of the more disturbing underlying trends that wasn’t directly addressed but seems to be prevalent among both the individuals portrayed on the program as well as those who joined the discussion board is the monumental problem of both lost pension plans and lost jobs. There seems to be an increasing incidence of baby boomers who are turned out of corporations and cant find replacement positions that put them anywhere near the financial glidepath that they had counted on to fund their retirements.

To make matters worse, the bedrock financial claim most retired Americans expect to rely on, Social Security, continues along a path of financial decline. Alicia Munnell, who appeared on the program, provides a review of the 2006 Social Security Trustees Report. Her summary:

The 2006 Trustees Report reconfirms what has been evident for two decades — namely, Social Security is facing a long–term financing shortfall. Changes in the underlying assumptions are unlikely to eliminate the problem. Although future rates of immigration, disability, mortality, and real wage growth are uncertain, switching any of the individual assumptions to the Trustees “low cost” scenario closes only part of the gap. Therefore, this problem can be solved only by putting more money into the system or by cutting benefits. There is no silver bullet.

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