Retirement Crisis: Don’t Lean Too Heavily on Social Security

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If you gave Bogle five minutes, though, he thinks he could at least fix Social Security.

“I’d change the cost-of-living adjustment — not to cheat the retired people, but to get a formula that was right. It would result in savings,” he said in a question-and-answer session at the Morningstar conference. “That in itself would probably cure it. But I’d add a couple of things. I would raise the maximum taxable earnings for Social Security. I’d raise it to maybe $140,000, $150,000.”

Bogle’s prescription for what ails Social Security is consistent with fixes proposed by organizations like the Financial Planning Association. Both expenditures and revenue need competent adjustments — no surprises there — or else the system begins to fall apart as early as 2021, according to the Board of Trustees of the Federal Old-Age and Survivors Insurance and Federal Disability Insurance Trust Funds. Other proposed changes to Social Security include raising the age of retirement, limiting benefits for those with high incomes, and simply reducing overall payouts.

Social Security was never intended to replace individual retirement planning, but unfortunately, data suggest that people are leaning heavily on the system.

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