Your road to retirement can be made smoother by preparing and knowing your options.
No matter the course taken, the truth is that most retirees will need more funds in retirement than they think. And counting on the government or corporate sponsored plans can lead to disappointment.
The 3-Legged Stool of Retirement refers to the 3 traditional retirement income model which consists of a Social Security check, a company pension, and your personal savings.
Will Social Security Be Enough?
When Social Security first started in August 1935, there were 42 people working for every one retiree. Current it is less than 3 to 1.
According to the Social Security Administration, Social Security benefits provide about 38% of the income for elderly Americans. And, for 52% of married couples, and 74% of unmarried people, Social Security provides 50% or more of their income.
Social Security is the largest source of income for most elderly Americans today, but it was never intended to be your only source of income when you retire.
Are Pensions Disappearing? Do You Have a Pension Plan?
In the 2013 Bureau of Labor Statistics reports, only 10% of private industry establishments offer defined benefit pension plans.
With 2 of the 3 legs on the stool crumbling away, there has been a shift to personal responsibility.
Are You Saving Enough to Retire?
36% of respondents in the 2014 Retirement Confidence Survey stated they have less than $1,000 in savings.
Without enough savings, an unexpected death can have a negative financial impact on your family's being. In fact, in a recent survey, 47% of respondents reported they would feel the financial impact of a primary wage earner's death in as little as 6 months.
What Are Your Chance of a Windfall?
A 2012 survey of baby boomers indicated that one-third may not receive any inheritance. Of course...if their parents are only receiving social securities themselves.
According to the Center for Retirement Reseach at Boston College, the median inheritance was only $64,000.
The odds of winning the Powerball is one in 175,223,510.
Good luck if your retirement plan is the Powerball.
Are Inflation and Income Taxes Eating Your Savings Away?
From postage stamps to the cost of buying a home, prices generally rise over the long term and the value of money decreases. This is the effect of inflation. The longer it takes to reach retirement, the greater impact inflation can have on your buying power. Because of this, you may need to consider the effects of inflation and how to outpace it.
It’s not how much you earn, but what it buys.
The Congressional Budget Office estimated that the ratio of publicly held debt to GPD in 2013 was 73%, twice the percentage it was in 2007. The Urban-Brookings Tax Policy Center estimates that under current policy, the debt/GDP ratio will rise to 100% in 2038 and then continue to rise. All told, to keep the debt/GDP ratio at just over 70% through 2040 would require immediate and permanent policy adjustments such as reductions in spending or increases in taxes.
It’s not how much you earn, but how much you keep.
How would you like a solution that will provide another source of retirement income TAX-Free?