Business, Government Legal News from throughout WVWill social security still exist when you retire?

Whenever I'm talking to a client under 40 years old about retirement, this statement is often uttered: "Social Security? That won't be around for me."

Not that it won't be as much as projected, or that they might need to retire later.

It. Won't. Exist.

Now, I highly doubt the common assumption that "it won't be available at all" is likely. It is also unlikely that Social Security will work exactly as it does now.

Current Situation

Last year, more benefits were paid out for Social Security retirement than were collected in payroll taxes. Although this was projected to happen, it wasn't expected to happen yet. The long recession and high unemployment equals fewer workers paying into the system.

Regardless, based on recent projections, the Social Security "trust fund" was expected to be exhausted around 2037. At that point, if no changes were made, there would still be enough revenue to pay for 75 percent of projected benefits.

In other words, at some point, retirement benefits will either be reduced, taxed or delayed, and current workers will likely be subject to higher taxes to pay for benefits.

There are only so many solutions.

What Should You Do?

Facing an uncertain scenario is what the planning process is all about. There is uncertainty with investments. Uncertainty with future inflation. And of course, uncertainty about Social Security.

In the planning process, certain assumptions are made. With our clients, we tend to make conservative assumptions erring on the side of caution. Factoring in an uncertain future of Social Security should be part of this process.

With Social Security, most people agree changes are likely, and it's more a matter of when, not if. Because we know that now, it may be easier to account for in your plans than, say, trying to predict what the stock market will do during your lifetime.

If you are comfortable with the projections that Social Security will fund 75 percent of current projections, perhaps you could use this number.

If you think about the options to improve solvency, building in likely solutions makes sense also. By that, I mean, delaying the age you start to receive benefits, increasing the amount subject to taxation and lowering the possible benefit are all good places to begin.

Although there are no guarantees to what will ultimately happen, incorporating these likely scenarios into your plan will go a long way toward a successful retirement.  In this new year, consider reevaluating your planning process to determine if you are comfortable with your projections for the future.

Russell Dunkin is a wealth adviser with McKinley Carter Wealth Service, an SEC- registered investment adviser with its principal place of business in West Virginia. The information contained herein is general market information only and is not intended to be personalized investment advice.  Dunkin can be contacted at rdunkin@mc-ws.com, 304-230-2400 or 866-306-2400.