Avoiding the Social Security Iceberg
Posted on 01/26/2016
Contributed by Walter H. Brown
Investment Advisor Representative
It is time to maximize your retirement plan as the social security iceberg is directly in the path of your retirement needs. The congressional budget office has warned that social security’s 2.8 trillion dollar trust fund will run dry in 13 years. Despite decades of presidential commissions investigating this scenario, the government has failed us and this is the reality of the current Social Security dilemma.
Already, Social Security retirement ages will start rising in 2017 by two months per year; hitting 67 by 2022. This was written into law in 1983. If you currently attempt to retire at the age of 62, you will be taking a cut of 30% to your retirement nest egg. However, even at the current rate of benefit reduction, raising the retirement age to 70 by 2040 would only close the current deficit by less than one third. So, it seems obvious that more bad news is coming.
Even before the coming cuts, social security is not especially generous and will not sustain you in a long retirement. As of this year, there is not even a cost of living increase to keep up with inflation. Also, since the late 1990’s, a law was passed to allow the government to tax Social Security payments. We all know we are living longer, so how can we sustain retirement income until the end of life?
Furthermore, when the trust fund has run dry by the end of 2029, an automatic across the board 29% benefit cut, including the oldest retirees and the disabled, would be needed to bring program costs in line with revenue.
The trust fund represents the surplus taxes the government has collected from 1984 through 2009. The government spent these funds and like the 19 trillion dollar National Debt, the money is gone and the bill has come due.
Now more than ever you must be cognizant of the fact that when it comes to a fruitful retirement, we are on our own and if things don’t change, it will only get worse. The only way to protect yourself from the government’s mismanagement for all these decades is to take advantage of the benefits afforded you in corporate and individual retirement accounts. You must contribute to these plans as much as you can. You must manage your retirement plans in a prudent manner or enlist a professional to do it for you.
In closing, if you want to live the lifestyle you are accustomed to in retirement, you must take the responsibility. We at magii are here to help. To keep us apprised of what and how we can help you, please register yourself and your loved ones. We will send you timely and informative knowledge that you can put to work today for your benefit.
Feel free to call us at (631) 434-8200, option 3