Having a
PLAN = Peace of Mind
It might give us greater peace of mind to know that we can retire when we want
to at the lifestyle we want or if we are already retired, to be able to maintain
that lifestyle in spite of inflation; we might want to make certain that we are
properly insured in the event of death, disability, or a nursing home stay; and
beyond all of those possibilities, we may feel the need to know that our Wills
and Trusts are going to distribute our assets to the people desired in the most
tax-wise way possible. Certain proactive actions will lead us to fulfillment
while other reactive paths lead us in the opposite direction.
If, however, we never crystallize our goals, we don’t know if a path is leading
us to where we want to be or a place that consists of emptiness and frustration.
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AFFILIATED FINANCIAL PRODUCTS
· Complete
retail brokerage services
· Managed
investment accounts (including accounts held by others)
· Life,
disability and long-term care insurance
· Fixed
and variable annuities
· Pension
plans, including employee stock ownership plans (ESOP’s)
· Small
business retirement accounts
· Individual
retirement and education accounts |
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in YOUR Life...
Have
SAFETY.
SECURITY, and
PEACE of MIND
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Financial Plan Today.
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Will Social
Security Retire Before I Do?
People have traditionally seen
Social Security benefits as the foundation of their retirement
planning programs. The Social Security contributions deducted
from your paycheck have, in effect, served as a
government-enforced retirement savings plan.
However, the Social Security
system is under increasing strain. Better health care and longer
life spans have resulted in an increasing number of people
drawing Social Security benefits. And as the baby boom
generation (those born between 1946 and 1964) approaches
retirement, even greater demands will be placed on the system.
In 1945, there were 41.9 active
workers to support each person receiving Social Security
benefits. In 2000, there were only 3.4 workers supporting each
Social Security pensioner. And it is projected that by 2030,
there will be only 2.1 active workers to support each Social
Security pensioner.1
| You should
consider that as your income gets higher, Social
Security replaces a proportionally smaller
percentage of retirement benefits. It used to be
that you could receive full benefits only after
you reached age 65. But in 2003, the age to
qualify for full benefits began to increase on a
graduated scale. By 2027, the age to qualify for
full Social Security benefits will have
increased to age 67, where it is scheduled to
remain.
That means in the
future, you will probably have to wait longer to
qualify for full Social Security benefits to
start replacing a smaller percentage of
your pre-retirement income. |
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Source: 1 Social
Security Administration
Social Security Income
Estimating your future Social
Security benefits used to be a difficult task, but
not any longer. Every year, the Social Security
Administration (SSA) provides a Social Security
Statement to working taxpayers aged 25 and older.
This statement, which is sent automatically two to
three months before a taxpayer’s birthday, provides
a report of how much the taxpayer and his or her
employer paid in Social Security taxes and a summary
of the estimated benefits the taxpayer may be
eligible to receive now and in the future.
The Social Security Administration
will also provide a statement to any taxpayer who
requests one. To request a statement, simply submit
a copy of the Social Security Statement request form
(SSA-7004). You can obtain a copy by calling
800-772-1213 or by applying online at
www.ssa.gov.
This form will ask you for a number
of facts, including your name, Social Security
number, date and place of birth, your mother’s
maiden name, your previous year’s earnings and an
estimate of your current and future earnings, and
the age at which you plan to retire.
Based on this information and its own
records of your previous Social Security payments,
the SSA will produce a four-page Social Security
Statement, which will arrive in two to four weeks,
that lists the benefits you’re likely to receive
upon your retirement, as well as general facts about
Social Security and Medicare and the assumptions
used in estimating future benefits
It’s interesting to note that the Social Security
Statement includes a warning about the serious
problems facing Social Security in the future.
Language mentions the possibility that “the current
law may change because, by 2040, the payroll taxes
collected will be enough to pay only about 74% of
scheduled benefits.” This is a reminder that
taxpayers are ultimately responsible for funding
their own retirements and that their future Social
Security benefits may be lower than indicated by
their Social Security Statements.
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© 2006
Emerald Publications
|
 Start
Planning
for Your Future
Scott Ellis
Investment Adviser Representative
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Why Do People Buy Annuities?
There are a number of reasons why people buy
annuities. This insurance-based financial vehicle can
provide many benefits that retirement investors might want.
Deferral of taxes is a big benefit, and so is
the ability to put large sums of money into an annuity —
more than is allowed annually in a 401(k) plan or an IRA —
all at once or over a period of time. Annuities offer
flexible payout options that can help retirees meet their
cash-flow needs. They also offer a death benefit; if the
contract owner or annuitant dies before the annuitization
stage, the beneficiary will receive a death benefit at least
equal to the net premiums paid. Annuities can help an estate
avoid probate; beneficiaries receive the annuity proceeds
without time delays and probate expenses. One of the most
appealing benefits of
an annuity is the option for
a guaranteed lifetime income stream.
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What Is a 401(k) Plan?
A 401(k) plan is self-directed, qualified
retirement plan established by an employer to provide
future retirement benefits for employees. Employee
contributions are made on a pre-tax basis, and employer
contributions are often tax deductible. [Roth 401(k)
contributions are made after-tax, but qualified
withdrawals in retirement are free of federal income
tax.] Many employers are now enrolling new hires
automatically in 401(k) plans, allowing them to opt out
later if they choose not to participate. This is done in
the hope that more employees will participate and will
start saving for retirement at an earlier age.
If you elect to participate in a 401(k)
plan, you can allocate a percentage of your salary to
your plan every month. The maximum annual contribution
is $15,500 in 2007. If you will be 50 or older before
the end of the tax year, you can contribute an
additional $5,000. Contribution limits are indexed
annually for inflation. The funds in your account will
accumulate tax deferred until
you begin taking distributions in retirement.
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© 2006 Emerald Publications
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