Forget the Social Security Trust Fund Running Out -- This Retirement Bombshell Is Even Scarier

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The Social Security trust fund is slated to empty in 2034. And when that happens -- if no action is taken by the federal government -- Social Security will likely have to reduce the benefits it pays out by around 25%. If the prospect of having Social Security benefits slashed by 25% scares you, then consider this.

As of right now, 45% of baby boomers -- the massive generation retiring over the next decade and a half -- have no retirement savings at all. Worse, the percentage with no retirement savings is increasing: 42% of baby boomers had no savings in 2015, and historically the figure has been around 25%. Those numbers come courtesy of a study by the Insured Retirement Institute, which published the report Boomer Expectations for Retirement 2016.

If having Social Security retirement benefits (which currently average $1,347 per month for retired workers) slashed by 25% sounds awful, then imagine relying completely on Social Security, and dealing with cost-of-living adjustments that have lately been minimal or nonexistent, for the rest of your life.

Aside from losing Social Security entirely -- which, for the record, no one is seriously arguing will happen -- that's the ultimate retirement nightmare scenario.

Baby boomers: Here's what you can do

If you're one of the 35 million baby boomerswho have no retirement savings, time is short -- but there is still time to put yourself in a better position for retirement. Here are a few ideas:

Power saving:Retirement plans like traditional 401(k)s and individual retirement accounts (IRAs) are great savings vehicles for putting away money that can then grow without taxation until you withdraw them. What's more, saving money in those accounts gives you a tax deduction for the year in which you make the contribution, so you can take a little extra home from Uncle Sam. And there's a special bonus for savers over 50: You can make "catch-up" contributions, socking even more money away. While the regular contribution limits for 2016 are $18,000 in a 401(k) and $5,500 in an IRA, savers over 50 can put away another $6,000 and $1,000, respectively, in these accounts.

Reducing debt:A study conducted by the Consumer Finance Protection Bureau in 2014 concluded that "rising mortgage debt is threatening the retirement security of millions of older Americans." The study noted that, as of 2010, 65% of consumers aged 65-74 were carrying some kind of debt. Worse, for those with mortgage debt aged 65 or older, the average balance nearly doubled from $43,400 to $79,000.

Lower debt means lower interest expenses in retirement, so take steps to reduce debts -- particularly high-interest debt like credit card debt -- while there's still time. Consider this: If you owe $15,000 on credit cards at an 18% interest rate, and you only make the minimum payments, you'll end up paying over $8,500 in interest over the 14 years and 10 months it will take you to pay off the debt. Every extra dollar you can pour into paying off your credit card balance will save you significant extra cash later on in life.

Crosstraining:Consider working later in order to increase your savings andreduce how long they have to last. It's a good idea, but keep in mind that there's a good chance you won't be doing it in your current job. According to a Transamerica Center for Retirement Studies survey of retirees and pre-retirees, 60% of current retirees retired sooner than planned -- and 66% of them retired because of job-related issues (organizational changes, buyout offers, losing their job, and the like). Unless you expect things to be radically different at your company, now is a good time to consider picking up a side gig or crosstraining into some new skills that you can deploy in the event that something derails your plans at your current job.

The most important thing to remember

While baby boomers don't have nearly as much time as their younger colleagues, there's still time to dramatically improve your financial situation. The most important thing you can do today: Don't delay. Take advantage of your remaining earnings years and put yourself in a better position for enjoying a stable and happy retirement.

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