What the Wall Street Journal thinks of your Plan A: if you're under 40, listen up!

So what does the Wall Street Journal think about your retirement plans? Not much if you're counting on Social Security to provide anything close to enough to live on. Maybe enough to buy an occasional Skinny Latte at Starbucks, but not much else. Here's a new article that tells you if Social Security is your future, then you might not have one. The full article is here, I'm quoting it in case the link goes dead at some point in the future, because this material is crucial to all of us.

Plan now while you still can

• April 25, 2012, 11:48 a.m. ET

RETIRING: If Social Security Is Your Plan A, Get A Plan B

--U.S. workers younger than 40 likely to receive greatly reduced benefits

--Small changes in strategy can boost one's benefits

--Damage could be mitigated if policy makers were to agree on a solution

   By Robert Powell
   A DOW JONES COLUMN

If Plan A in your retirement scheme is Social Security, it's time to start working on Plan B.

Based on this week's report from the folks responsible for the Medicare and Social Security Trust Funds, Americans--and especially those under age 40--need to reconsider their retirement plans.

Absent major action by lawmakers, the annual reports say that the combined assets of the Old-Age and Survivors Insurance and the Disability Insurance trust funds will be exhausted in 2033. That's three years sooner than was projected last year. And the Disability Insurance, or DI, trust fund will be exhausted in 2016, two years earlier than last year's estimate.

Come 2033, just 21 short years from now, Social Security will pay just 75% of scheduled benefits, just 75 cents on the dollar. So, instead of getting, say, $1,000 per month from Social Security, you'll get just $750 per month come 2033.

Meanwhile, the outlook for the social insurance program that covers nearly 50 million elderly and disabled people was slightly worse than findings from last year. The trustees, as they did last year, forecast that Medicare's hospital insurance fund would begin to run out of money beginning in 2024.

So what adjustments do you need to make to your retirement plan given the latest reports from the trustees of Social Security and Medicare?

Well, if you're already retired, don't worry. "The advice I give people is that if they are already retired, I see little risk to benefits," said Jeffrey Brown, a finance professor at the University of Illinois at Urbana-Champaign. "No politician will cut for current seniors."

Others share that opinion. "I would tell those living in retirement or very near retirement, make your decisions based on the current rules," said Bill Meyer, the president of Retiree Inc. "History tells us that Social Security benefits will not be impacted for those in or very near benefit-claiming age. For example, it took seven and 17 years respectfully from the time change [for Social Security] was announced to implementation back in 1983 and 1977."

But for those who plan on retiring in 2033 and beyond, the advice is much different. "It might be smart to look at the worst case," said Andy Landis, the founder of "Thinking Retirement and the author of Social Security: The Inside Story."

"What if Congress does nothing between now and 2035? At that point Social Security payments could be cut up to 25%. If you're a pessimist, work that into your retirement plan," Landis said.

  If you're under age 40, start worrying

In other words, anyone younger than, say, 41 today should plan to get just 70% to 75% of promised benefits, Brown said.

Unfortunately, there's no silver bullet to make up the difference between what those retiring in 2033 expected to get from Social Security and what they will get.

Those folks should consider the usual strategies and tactics: up the amount they save toward retirement; invest differently, perhaps with an emphasis on creating guaranteed inflation-adjusted income not unlike that provided by Social Security; delay retirement; work part time in retirement; delay taking Social Security; and consider any and all ways to turn assets into income, be it home equity, the cash value in your life insurance policy, or the collectibles in your curio cabinet.

  Optimize your Social Security benefit

Of all the bromides, however, delaying--or what Meyer and other experts refer to as "optimizing" Social Security benefits--is perhaps the most important. For one, the average American who optimizes when to claim Social Security can "make their savings last two to 10 years longer," according to Meyer.

What's more, what's good for you is also good for the Social Security Trust Fund. "Delaying or optimizing Social Security will help will help lessen the near-term burden on the Social Security liabilities," said Meyer.

One such strategy is "claim and suspend," whereby, typically, a husband would file for his benefits and then suspend those benefits so that his wife could collect the spousal benefit off her husband's work record. "The claim-and-suspend strategy is typically used by married couples where the wife wants to start receiving her spousal benefit but the husband wants to delay his benefit to age 70 in order to earn maximum delayed credits," Floyd previously told Retirement Weekly.

Of all the Social Security claiming strategies, however, experts are telling older Americans not to panic and take Social Security early at age 62 or before normal or full retirement age just because of the program's financial woes. "It may be tempting to take early benefits in light of the system's worsening financial condition, but those who do so risk being stuck with a permanently reduced benefit and lower lifetime income," said Elaine Floyd, director of retirement and financial life planning at Horsesmouth LLC and author of "135 Social Security Questions Answered: What Savvy Advisors Need to Know," as well as "The Financial Advisor's Guide to Savvy Social Security Planning."

"Even if future benefits are reduced in some manner, it is inconceivable that those who took early benefits would come out ahead of those who had delayed," Floyd said.

Planning for health-care expenses in retirement, given Medicare's financial problems is, however, an entirely different matter. "I'm not sure how policy makers can get escalating health-care costs under control, but in light of the trustees' sixth consecutive 'Medicare funding warning,' the best thing people who are living in or planning for retirement can do is set aside funds for future health-care costs," said Floyd.

Experts, meanwhile, say that fixing Social Security and Medicare's financial problems isn't all that hard. There are two basic choices and variations on those choices. What's hard is mustering up the desire and will on the part of lawmakers to tackle the problem before it becomes too late.

"One, either we spend less by reducing the level or growth of benefits, or two, we put more money into the system via higher payroll taxes, or general revenue transfers," Brown said. "There are a myriad ways to do either of these things--raising the retirement age, changing how we index benefits [wages vs. prices], other changes to the benefit formula, and the like."

To be sure, there is debate over who should bear the brunt of the proposed fixes: reduced benefits or increase taxes.

Landis, for instance, doesn't think retirees should have to pay with a reduced benefit. "With the average retiree getting only about $1,200 per month, and with that being most of his or her income, benefit cuts start to seem like getting blood from a turnip," Landis said. "With wealth disparity at historic highs, income-tax rates at historic lows, and payroll taxes capturing a smaller percentage of all wages, Congress might want to look at the tax side of the equation."

Others, meanwhile, say lawmakers should consider a combination of reform proposals so that no one group pays the price for saving Social Security.

"These [proposals] would include raising the wage base subject to payroll taxes, gradually phasing in a higher retirement age for future retirees, and slowing the growth of future benefits for higher earners," said Floyd. "I hesitate to favor cost-of-living adjustment reductions for current recipients because they're going to need those COLAs for Medicare premiums, if nothing else."

To be fair, some experts, including Landis, say there's no need to press the panic button just yet. "First, let's all take a breath, because the report is no surprise," said Landis. "Forecasts about Social Security's solvency have been remarkably stable since 1983, the last big overhaul of the system. Projected insolvency dates have varied from the mid-2030s to the early 2040s consistently since then. We're 'on track' according to the 1983 overhaul."

But even though we're on track doesn't mean changes aren't necessary. It's just that the changes can be small. "What Social Security needs right now is a tuneup, not another major overhaul such as that which took place in 1983," said Landis. "Obviously, taxes need to be raised and/or benefits reduced. Congress needs to decide how much of each is right.

But is time running out? "Any changes are cheaper if done sooner," Landis said. "Waiting until 2035 just drives up the cost of reforms."

Lita Epstein, author of "The Complete Idiot's Guide to Social Security and Medicare," agreed: "Clearly, Congress must act as quickly as possible to fortify Social Security and Medicare. The quicker the Congress designs the fix the less painful it will be. Congress can't keep kicking its work down the road."

Congress is, of course, unlikely to take any action in an election year. But Landis is holding out hope: "What if Congress reframed the issue? Wouldn't 'saving Social Security for another generation' have political benefits? Nice to have on your resume."

(Robert Powell is editor of Retirement Weekly, a MarketWatch/Dow Jones service, and writes for MarketWatch. He can be reached at 415-439-6400 or by email at AskNewswires@dowjones.com.)

I don't get it, but fortunately it doesn't matter in the long run

Google is changing their blog interface from one which is simple and easy to use, to one that is confusing, counter-intuitive and downright silly. I don't get why companies insist on taking something that works and messing with it until it is no longer useful, but this seems to be a consistent component of corporate America.

So, this blog will be looking for a new home and when I find one I will let everybody know.

Fortunately, such things are minor blips in an otherwise steep trajectory upwards. I spent last weekend in Las Vegas with 7,000 people from around the globe, so many that the immense ballroom we were using was barely big enough. I had personal conversations with folks from Eritrea, Zimbabwe, Singapore, Cyprus, Brazil and the U.K., an amazing grouping of talented and enthused people who helped me see the world in a new light. I heard a speech from the Minister of Tourism for Zimbabwe, who also sits on the United Nations Tourism Committee and is incoming Chairman of the African Council of Tourism, confirming that I am part of the future. Sometimes you know things objectively, but only internalize them when they are seen through the eyes of another.

Then I had a really, really eye-opening course on the effects of stress in the workplace, and the horrific consequences of our national obsession with working ourselves to death, consequences that directly affect not only the individual, meaning you and me, but also the companies that we work for. No wonder our economy is struggling.

All in all, in what is becoming a long list of moments in the past year that have changed my life, this one may be at the top of the list.

The Prodigal Son - Now I get it!

It's amazing how opening yourself up to new people and new ideas can revolutionize your understanding of the world. See, I never quite understood the whole story of the Prodigal Son. One son takes the wealth his dad gives him and wanders off and blows it on wine, women and song, while the other son works hard, practices self-discipline and generally helps dad with anything he needs. Then, when the first son has burned through all of his cash, he comes home begging for more, and dad treats him like royalty while seeming to snub the son who stuck around and didn't give him any grief.

That doesn't seem fair, does it?

At least, that's how I always saw it. But Saturday I had a conversation with a friend that suddenly made me understand this whole parable. The key thing I learned? Timing is everything.

My friend had been given a message once upon a time, but at that point he/she was not in the frame of mind to accept or understand that message. Had the giver of that message tried to force it upon them it would have invoked the inverse response to what they desired; in other words, he/she would have gotten angry and said something 'stop telling me what to do', just as the first son in the parable would have done had dad tried to force him to tow the line. You can't make people do what you want, you can only motivate them to take action; whether they do or not is up to them.

But when they finally do decide to take action to change their life for the better, such as the first son in the parable, then you have to be ready to welcome them with open arms. No recriminations, no chastising, just joy that they have finally found what they needed. That's the lesson son #2 did not learn. He was resentful that his good behavior was not rewarded by his father, when that behavior is actually its own reward. He was living a great life and should have been thrilled by that. Instead, he was jealous of his brother.

It's amazing what talking to people can do for you, if you will only listen to what they are saying. My friend appears to have come to this same conclusion now, because now the time in their life seems to be right for them to hear it. It wasn't before, but now it is. If so, then bravo! I hope it is so, because the message has certainly made my life better.

But now that doesn't matter, because it was not only my friend who was changed, but me, too. Seeing them come around to understand what is being offered helped me come around to understand the Parable of the Prodigal Son, something I have puzzled over for decades. I have gained tremendous insight, an epiphany, if you will, so for me the discovery process continues unabated.