The Federal Deficit Commission issued it’s initial draft proposal earlier this month that began to lay the groundwork for it’s recommendations to cut the federal deficit by a cumulative $4 Trillion by the year 2020 (the full draft can be found here: http://www.fiscalcommission.gov/sites/fiscalcommission.gov/files/documents/CoChair_Draft.pdf). As many predicted, the draft proposal included a number of hotly contested recommendations, many of which had to do with cuts in “entitlement spending.” For example, the Social Security “Full Retirement Age,” which is the age at which one can collect unreduced Social Security retirement benefits, would increase to 69 by 2075. To put this in perspective, the current Full Retirement Age for those retiring today is 66. Note that actuarial estimates for increases in longevity are projected to fully offset these changes.
Of course there is usually broad public outrage when it comes to reducing “entitlement” benefits, whether or not it is needed or makes intellectual sense. An article titled “Taming Federal Deficit will require shared sacrifice” makes an excellent point that the only solution to the financial challenges our country faces is shared sacrifice (this article can be found here: http://www.thenewstribune.com/2010/11/15/1425125/taming-federal-deficit-will-require.html). We can all hope that U.S. leaders will have the courage needed to make tough decisions and help everyone realize that it is shared sacrifice that will make our country stronger and that without it, political bantering and further deterioration of our financial health is imminent. To the extent sacrifices must be made, how will they impact personal wealth plans in the future? How much should one depend upon Social Security income in their planning? One thing is for sure- it's time for all of us to wake up, smell the coffee, and get to work being proactive about our future.
