April 1, 2014

Retirement Planning: The Social Security question

If you’re counting on Social Security to provide a secure retirement, think again. Social Security benefits only account for less than half of today's retirees' income. Longer life expectancies and the aging of the population will put an increasing burden on the system, making your own retirement funding more important than ever.

The exact amount of your Social Security benefit will depend upon the number of years you’ve been working and the amount you’ve earned. Retirement benefits are collectible at any time on or after age 62, but can be delayed until age 70. How much you get depends upon when you retire; reduced benefits are paid if you retire between ages 62 and your "normal retirement age," as defined by Social Security, while delayed retirement credits apply if you wait until beyond your normal retirement age.
Note that retirement benefits are not automatic, and you must first apply for benefits before you can receive them. Some time is required to process all the paperwork, so plan to apply several months in advance of your retirement date. Regardless of your Social Security options, think of Social Security as only a small percentage of your total retirement plan, and set aside a portion of your income on a regular basis.

When Social Security was established in 1935, the average life span among Americans was 63. Today the average lifespan is more than 78 years, according to the National Center for Health Statistics. This aging of the population has led some experts to predict that Social Security may run out of assets by 2033, a possibility that makes building your own funds for retirement more important than ever.
Does all of this mean you will have no Social Security to draw on when you retire? While an exact timetable of what will happen to Social Security is uncertain, present trends clearly indicate that your own efforts to build financial security for your retirement years are more crucial than ever. The time to begin planning for retirement -- no matter what your age -- is now.

Contact the retirement and investment experts at Lake Michigan Investment Services (LMIS) for a free portfolio analysis and an honest assessment about how much to expect from Social Security. Go online to lmcu.org/investments or call (616) 234-6524 to set up an appointment with a LMIS retirement advisor.