The New York Times is reporting today what many had been warning about for years: "This year, the system will pay out more in benefits than it receives in payroll taxes, an important threshold it was not expected to cross until at least 2016, according to the Congressional Budget Office." Gosh, no one saw this coming.
The Times blames the markets, of course, specifically the housing market crash, the stock market crash and the recession. People have lost jobs, and applied for benefits sooner; tax receipts are down.
In other, more enlightened precincts, experts have simply pointed out that the gub'ment spends too much, promises too much and basically runs afoul of common-sense budgeting/spending truths. What is a financial planner and his client supposed to do? If your client intends to retire in five years, do you ramp up saving and force him and his family to live like paupers to pad his retirement account because SS won't be there? Essentially, the gub'ment (federal, state and local) have been promising too much; promises will be broken, as this magazine said on its cover in 2008.
What of clients with public pensions or even private ones? You might have to re-draw their plans, since you cannot expect any public pension plan to be sustainable down the road.
Peter G. Peterson has been waging a war of words on the problem of gub'ment spending (the use of debt) for years.