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Social Security: Replacing Less and Less of Your Income May 14, 2007

Posted by pf in Expenses and Savings.
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Today I came across an article from CNNMoney.com entitled “Shrinking Social Security”.  While it’s certainly no revelation that Social Security is in trouble and those of us who are still quite far from retirement may not be able to count on it as a major source of income in retirement, the article paints a sobering picture of what we can expect in the future:

  • Currently, Social Security accounts for 50% or more of the retirement income for 60 percent of retirees.  As traditional pensions go the way of the dinosaur and our savings rates continue to be abysmally low, our dependence on Social Security is likely to increase while the actual amount of our income it is replacing decreases.

  • Although Social Security is adjusted for inflation, Medicare premiums (which also come out of your Social Security check) are rising faster than inflation…thus taking an increasingly bigger bite out of the total income you will actually receive from Social Security.
  • Social Security is taxable once your income exceeds $25,000 ($32,000 for those filing jointly).  This is not adjusted for inflation, and so as your actual income rises with inflation, you will likely exceed this threshold by the time you retire (whether or not your actual purchasing power has increased).

So, what does this all mean for you and me?  Save now…or reap what you sow…which won’t be much if you don’t plant the seeds of retirement now.

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Comments»

1. marcus anthony bynum - May 27, 2015

i looked at an article on funds – personal finance from the investors business daily …. for one if you’ve been delaying social security benefits , consider starting them. it can limit further erosion of your nest egg.. some advisors suggest using an annuity for lifelong cash flow .. But you should consider the specific terms carefully before committing…

2. marcus anthony bynum - May 29, 2015

I looked at the Coverdell education savings account (esa) , and the control of assets are the participant/ account owner maintains control of account, and the trustee or custodian maintains control of the account … now the qualifications of the account offers you to open a Merrill edge nextgen college investing plan account and fund the account with at least $5,000 in cash within 45 calendar days of account opening .. the balance must be held in the account for a minimum of 90 consecutive days following the funding date…..

3. marcus anthony bynum - May 29, 2015

I looked at the Coverdell education savings account (esa) , and the control of assets are the participant/ account owner maintains control of account, and the trustee or custodian maintains control of the account … now the qualifications of the account offers you to open a Merrill edge nextgen college investing plan account and fund the account with at least $5,000 in cash within 45 calendar days of account opening .. the balance must be held in the account for a minimum of 90 consecutive days following the funding date….. source from bank of America …. my opinion is that chase bank should have more investing skills but don’t have the rights due to the history of investment banking…..


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