Tag Archives: retirement planning

WHEN SHOULD YOU TAKE SOCIAL SECURITY?

Posted on by

#SocialSecurity #pensions #WhenToTakeSocialSecurity

Some people may want to take their Social Security immediately upon eligibility, just because they need the money.

For others, waiting may be a better option, even if you have to dip into your retirement savings while you wait.

The Atlanta Journal-Constitution tackled this decision in an article published Oct. 8, 2018.

In the article, Perry Volpone was determined to take his Social Security as soon as he retired. His financial adviser, Dana Anspach, argued against it. She urged the former retail executive, then 65, to put off applying for Social Security for five more years, because his monthly benefit would increase, the article says.

“(Taking the benefit immediately) would make me more comfortable,” Volpone argued. “The whole thing is just so much more complex than you think,” the article quotes him.

Here are the facts, as stated in the article: For each year past your full retirement age that you put off applying for Social Security, your monthly benefit will increase by 8 percent. That does not include any cost-of-living adjustments the government makes – as it did recently.

Here’s what you have to decide: How much, on average, are you earning with your retirement savings, plus any pension you might be receiving? If your savings – should we say, investments? – are earning you, on average, less than 8 percent a year, can you supplement your income through the dividends and interests on your investments, plus any pensions or other income, to allow you to keep your Social Security “in the bank” for five years or so?

Though that may require some thought, and good advice, as Volpone was getting in the article, there are some no-brainer decisions: if you have little or no retirement savings, and no pension, take your Social Security as soon as you can.

By the same token, if you have a good retirement nest egg, that’s kicking off good earnings that you can tap for living expenses, and/or you have a good pension, postponing Social Security until age 70 is also an easy decision.

If you are married, and both spouses qualify for Social Security benefits, the best decision might be to take the lower-earning spouse’s Social Security at that person’s full retirement age – say, 66 or 67 – and postpone taking the higher-earning spouse’s Social Security until that spouse turns 70. When one spouse dies, the other spouse gets only one check, and the higher-earning spouse’s check is going to be better.

A decision people make rashly is to take Social Security immediately upon qualification, because they believe it’s going to run out of money before they die. Most experts believe Social Security will be around in some form no matter what, if anything, government does to “fix” it.

There is something else to consider. What if there were a way a person, retired or not, could make extra money by committing a few, part-time hours a week working at something that would not feel like a “second job?”

There are many such vehicles out there for those willing to check them out. To find out about one of the best, message me.

In short, most of us dutifully paid into Social Security while working. When it was created, no one predicted the longer life span that medical and other science has given us, so there have been some financial headaches with the system.

Still, most predict it will never go away entirely, though we may see some combination of benefit reductions and increases in the retirement age in the future.

But, Social Security alone will not give you the retirement lifestyle you probably want. It can be part, but should not all, of your retirement income. It’s up to you to decide what kind of retirement you want, and use your working years to save, invest and prepare for it.

The younger you start doing that, the better prepared you will be when you get older.

Peter

RETIREMENT SAVINGS SHORTFALL PREDICTED

Posted on by

#retirement #savings #RetirementSavingsShortfall
Most everyone knows or suspects that people aren’t saving enough for a decent retirement.
But a World Economic Forum report spells it out: People are living longer. Investment returns have been disappointing. Therefore, within three decades there will be a $400 trillion shortfall worldwide in retirement savings.
The report was cited in an article by Katherine Chiglinsky for Bloomberg News. It was published June 4, 2017, in The Atlanta Journal-Constitution.
The shortfall includes a $224 trillion gap among the six large pension-savings systems: the U.S., U.K., Japan, the Netherlands, Canada and Australia, the article quotes the report.
Employers have been moving away from pensions and offering defined-contribution plans, which include 401(k)s, and individual retirement accounts. Those categories make up about 50 percent of global retirement assets, Chiglinksy writes.
The report warned that the savings shortfall in the U.S. is growing at a rate of $3 trillion a year, and may climb at an annual rate of 7 percent in China and 10 percent in India – countries with aging populations, growing middle classes and a higher percentage of workers in informal sectors, Chiglinsky writes.
So, how are you set for your retirement?
Have you got a pension lined up? If so, it’s entirely possible that it won’t be there when you are ready to take it, or it could be reduced.
Social Security by itself won’t let you live a decent life. And, if Washington doesn’t act, benefits could be reduced eventually. Many experts say we needn’t fear that Social Security will go away entirely. But benefit reductions are a possibility in a few decades.
Think of your retirement planning this way: if it is to be, it’s up to ME.
If you are young, and just starting your career, make retirement savings a priority. If you aren’t raking in big bucks, start with a small percentage of what you are making. Put that money away. Don’t touch it!
Once your savings have grown to an investible amount, say, a few thousand dollars, get it out of your bank savings account and put it into something that will pay you higher rates. Get good advice from a financial planner that you trust. You may want to start with fairly safe – everything outside of insured bank deposits carry some risk – investments, and diversify more as your money grows.
If you are older, you need to put more of what you earn into retirement savings. Young folks have lots of time to balance gains and losses. Middle-aged folks have much less time. Talk to a financial planner about you goals, and let him or her guide you as to how much to save, and in what vehicles to invest.
Of course, cutting spending is a must. Increasing income may give you a leg up on your retirement savings. To learn about one of best vehicles for doing both, message me.
In short, you can take matters into your own hands. It’s all about setting priorities, making good choices and sticking to your plan.
Whatever you sacrifice now, be it $100 a month in lattes, taking too many expensive trips etc., will pay you back in spades when your job goes away. And you don’t have to live in complete deprivation to do it.
Just look for value in what you buy, and make good choices in how you save.

Peter

THE DISAPPEARING AMERICAN DREAM, PART 2: RETIREMENT PREPARATION ISN’T WHAT IT USED TO BE

Posted on by

#‎AmericanDream‬, ‪#‎disappearingAmericanDream‬, ‪#‎economicgrowthrates #retirementplanning
Retirement planning is complicated for Americans of all ages.
So says Jeff Reeves, editor of InvestorPlace.com, who wrote a column for USA Today. It was published in the May 10,2015, edition of The Tennessean newspaper of Nashville.
The Employee Benefit Research Institute, in a 2014 survey, found that only 64 percent of Americans have saved any money for retirement to supplement Social Security benefits. It says that roughly six of 10 Americans have less than $25,000 saved for retirement, according to Reeves’ article.
Certainly, if you are young – say, in your 20s and 30s – retirement is a long way off. Or, so you think. Time travels with break-neck speed, and 30 years can go by very quickly. It’s never too early to save, even if it’s only, say, $5 a week. That may be one visit to Starbucks that you would be sacrificing.
Your parents and grandparents probably were diligent savers. Perhaps they were disciplined and never touched their retirement money.
In their day, perhaps, jobs didn’t disappear more quickly than cake at a child’s birthday party.
If you are young, you face a daunting task of keeping a good job for as long as you want it. If you are older, say, in your 40s and 50s, perhaps you had a good job for a long time, and it’s now gone.
All this complicates saving for retirement, so that task requires extra discipline, perhaps more than your parents or grandparents had.
Despite all the gloom-and-doom reports, Social Security is likely to survive. Benefits could be reduced a bit, but it should survive. The question to ask yourself is, what kind of lifestyle will I have on Social Security alone? Even if you add in a pension, should you be fortunate enough to have one, it’s still not going to be that much. If you are a careful, disciplined person, you would have spent your whole life watching every dollar. Your retirement years should be enjoyable, not ones of deprivation.
Well, one does not have to rely on a job, pensions etc., to have a good retirement. One does not have to engage in risky, unsafe investments to get a decent return.
But, to achieve that, one has to be motivated to want to change his situation, rather than accept it and complain about it.
If you are that type of person, visit www.bign.com/pbilodeau. Check out how many people from all different backgrounds, education levels and skills are not only securing their retirement, but helping others do the same.
Many of us do not want to take handouts, but want to get what was promised to us. Promises can, and often are, broken. That’s why motivated people look outside what they are used to and find a new way to prosperity.
Now, if you are indeed young, you can save your way to prosperity. Reeves quotes John Sweeney of Fidelity Investments as saying, “we are seeing many examples of people who have $1 million in a 401(k) because they started early, they diligently contributed and kept to it.”
That’s more difficult to do as jobs come and go, and jobs, if they are replaced, are often replaced with ones paying and providing less.
But the discipline you will acquire if you diligently save and not touch those savings until later years, and put those savings in the hands of a trusted financial adviser that won’t gobble up too much in fees, you can secure potentially great retirement.
The new Voya ads talk about “orange money,” that one must put away for retirement and not spend. Designate your own “orange money,” or whatever color you deem it, so you won’t have to scrape together an old age of deprivation.
Peter