Financial Security Is Up To You
If you are a Baby Boomer, hopefully you’ve spent at least a little bit of time over the past few decades thinking about the future. (Many of you actually haven’t and that is both sad and today, dangerous.)
When you’re young and vibrant, thinking about the really long term is almost an exercise in futility. You really can’t imagine what it will be like to turn 40 – let alone 50 or 60. Retirement is an abstract concept that you really can’t – or at least don’t want to – think about.
It’s pretty easy to defer long term planning when you are young. Back then, you had visions of becoming a millionaire at some point along the way, and financial issues later in life would be moot. Rich people don’t have to worry about money.
Well, actually they do, but that’s an entirely different story.
Another misconception that many younger people have – not just young Boomers back in the day, but the younger generations that follow – is that the government will make sure everything’s ok when you get older as well. After all, that’s what Social Security is all about, isn’t it?
Any Baby Boomer who started working in their twenties has already been working for 20 or 30 years, or more. The leading edge of the Boomers will turn 65 in 2011, the magic year that for some reason has always been identified with the mythical notion of “retirement.”
Our parents taught us to go out and find a job, work at it forever – with the same company of course – collect a healthy pension and have Social Security to fill in the gaps.
Along the way of course we’ve changed jobs multiple times, Bernie Madoff stole the pension money, and our savings has been gobbled up by who knows what.
Well, at least there’s Social Security to keep us safe.
Wrong.
After paying all that money in the form of Social Security taxes over the years, one would think that we’ll be able to collect nice fat checks in return, once we retire. Well think again.
To find out what you’ll actually be able to collect, check out the Social Security Administration (SSA) website. There you’ll find several calculators that you can use to determine what your benefits will be.
First of all, your benefits are based on what you’ve paid into the system. You earn credits for every year that you worked, based on net income, and retirement benefits are based on 40 year of work.
According to the “Quick Calculator” on the SSA site, as an example if you were born in 1950 and earned $100,000 last year, you could take early retirement (at age 62), and receive $1,541 per month from the government, provided of course that the system doesn’t go bankrupt sometime in the near future (which it might, when Boomers start collecting their due). It’s pretty clear that if you are accustomed to living on a salary of $100K, the monthly Social Security stipend probably won’t even cover your living expenses, let alone provide for “fun and relaxation.”
It get’s a little better if you wait a few more years and retire at a more appropriate 66, in 2016. Then the government will be happy to pay you more-a whopping $2,117 per month. At that point you’ll be able to grab some fast food meals out every now and then.
Of course I’m being facetious.
If you’re looking to retire in comfort, Social Security simply won’t cut it. You need to do something else, and do it quickly.
