No Cost Of Living Increase For Social Security Until 2013?
CLU, AEP, Chartered Financial Consultant
|View all articles by Theodore Massaro|
Compared To Previous Years
Seniors have never failed to receive an annual increase of less than 1.3 percent since automatic COLA went into effect in 1975, and have never received less than 5.9 percent combined over a three-year period. **
Should You Collect At Age 62?
Although collecting retirement benefits before your full retirement age makes sense for some people, there’s a potential drawback to consider: if you start collecting benefits early, your monthly retirement benefit will most likely be permanently reduced.
So before you put down the tools of your trade and pick up your first Social Security check, there are some factors you’ll need to weigh.
If you have a working spouse, more of your benefits could be taxed, and at a potentially higher rate. Additionally, working during retirement, even part time, will require you to take that income into consideration and may reduce your social security benefit even further. Also, current and future retirees are projected to live longer than any generation before them, which makes the future value of benefits even more meaningful.
Will your money last?
Traditionally, retirees have relied on the “three-legged-stool”: social security, a guaranteed company pension plan, and personal savings. Today, the pensions of past generations are gone. Social security is reportedly underfunded: by 2017 payouts will exceed program income, and it is estimated that by 2041 the trust fund will be exhausted***. Also, current retirees are finding that their spending in retirement is rising more rapidly than they originally thought, burning through savings more quickly. If just one of the legs comes up short, it could jeopardize your retirement plan.
A sound retirement income plan takes into account these financial risk factors, and also the potential for a retiree to outlive their assets, the effects of inflation on future income, and rising healthcare costs. The overall objective of planning should be to create a sustainable stream of income that also has the potential to increase over time.
Considering all of this, you must assume greater responsibility for your retirement savings. Ultimately, you have to find other sources of income outside the three-legged stool.
What You Can Do Now. . .
We have access to comprehensive planning and analysis tools that can help you navigate the issues discussed in this article. Call us at 856-810-7701 or visit us online at www. mfinancialplanningservices. com. Mention that you are interested in a complimentary retirement plan checkup, and you’ll have taken a very important first step: getting involved in your financial future.