You finally have your perfect retirement plan.
You have thought through every detail about your income/expenses in retirement and you are confident that everything adds up.
You are ready to hang it up and retire.
But then, the rules/laws change and throws a wrench in your plans!
Changes to taxes/retirement rules/laws happen all the time and you want to make sure your retirement plan can handle these changes without collapsing.
This is especially important as we can almost certainly expect changes to Social Security here in the upcoming years.
Changing the 3 Legged Stool
Social Security has said for years that if no changes are made then by about 2035 there would be a shortfall in benefits.
But this doesn’t mean that the program would completely go away.
They project that they would still be able to pay about 75% of benefits perpetually.
If this happens, then the Social Security leg of your 3-legged retirement income stool (pension, TSP, Social Security) may be a little smaller than you might have thought.
Are They Fixing It?
Social Security is one of the most popular government programs of all time and odds are changes will be made to make it solvent.
However, these changes could still change how/when you get benefits.
For example, one very probable solution will be to raise the FRA (Full Retirement Age).
This would mean that we would have to be older before getting full benefits.
And while no one likes to wait longer for benefits, this could make sense as life expectancies have grown considerably since the program began.
What You Can Do
When it comes to taxes, inflation, and Social Security, there is not much we can do as individuals to make change other than voting for those that support our views.
This is why it is so important to have wiggle room in your retirement to be able to handle the unexpected.
When people retire with barely enough then any little change in taxes, inflation, or Social Security can be enough to nullify their retirement plan.
Having a little extra is a great way to hedge your retirement against the future.