Ask not what Social Security can do for you ......

About a month ago I received my annual Social Security Statement with the usual Estimated Benefits and Earnings Record, and for the first time I decided to read every word in the statement. Michael J. Astrue, the Commissioner, implored in the section that was titled: “About Social Security’s future….” in the second paragraph he wrote: “In 2017 we will begin paying more in benefits than we collect in taxes. Without changes, by 2041 the Social Security Trust Fund will be exhausted and there will be enough money only to pay about 78 cents for each dollar of scheduled benefits. We need to make sure Social Security continues to provide a foundation of protection for future generations.”


Today I came across this on the internet and I thought it explains very well what you need to know about Social Security and the potential changes: http://finance.yahoo.com/retirement/article/107761/what-you-need-to-know-about-social-security.html?mod=retire-planning

Bottom line is I don’t know of anyone in retirement right now who can live on Social Security alone. And I am certain that when I retire I can not live on it alone. And if I live to 99 (my grandmother is 99, God blesses her), I wonder if SS will still exist. Both my mother and my grandmother each gets a check for about $350 per month after Medicare is taken out, and that is their only source of income! So it goes without saying that we need to take retirement into our own hands, be it setting aside a certain contribution into your 401K, or if you are investment savvy, be disciplined enough to set up your own monthly contribution plans through one of the discount brokerages. I like 401Ks for its forced savings feature where you can not touch since it comes with an early withdrawal penalty of 10% before 59 ½. When I was working I maxed out every year on my contributions as a way to force myself to save. The 2009 annual limit is $16,500, with a catch-up contribution limit (if you are older than 50) of $5,500. Just think, if you max out on the annual contribution and if I assume the limit stays constant (it does not, the limit has gone up every year), and assuming you work another 20 years, you would have set aside $330,000 pre-tax savings. Now that catch is in your allocation of these savings to the funds, we all saw what happened through out the financial crisis and it behooves one to diversify. There are days that I wish I had allocated all my 401Ks to money market funds instead of equities. Only you know what your risk appetite and tolerance is. Hopefully over the course of 20 years the markets will give you better returns than a money market fund.