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Wednesday, March 30th, 2005 This Issue: Proposed Changes to Social Security Whether our retirement is on the close or far horizon, we all have concerns about the security of Social Security and our governments' proposed changes. Social Security's problems are not an easy fix, and the controversy will likely continue for some time, but based on the questions we've received from clients, we thought it was important to weigh in with our thoughts and feelings here in "Beyond the Headlines" * Why does Social Security need to change? Why does Social Security need to change? * Smaller modern families mean that the number of workers paying into Social Security to support each retiree is decreasing. When Social Security was first created, there were more than 11 workers for each Social Security retiree; in 2004, the number of workers per retiree has dropped to 3, in 5 years there will be only 2 workers paying into Social Security for each retiree receiving a benefit. * Life expectancy is lengthening, but workers still target age 65 as their retirement age. Longer time in retirement means that Social Security must cover retirement income benefits for a greater number of years. Men and women who were 65 in 1935 could expect to live another 12 years or 13 years, respectively. Today, 65-year-old men can expect to live another 16 years, and women 19 years. This may seem like a relatively small increase in total years, but multiplied over many, many workers the Social Security nest egg required to support them grows exponentially. With all the media coverage pro and con; Who do we believe? * Unfortunately, there are many conflicting interests involved in the Social Security debate. Our best course of action is to listen to all viewpoints and to develop our own opinion of what should be done. Remember: Worry over the Social Security system is not new. President Clinton expressed concern about the "fiscal crisis in Social Security" in speeches he made in 1998 and 1999. The chorus of voices has grown in pitch and volume since then and now both advocates and opponents of President Bush's proposed changes are arguing their views. * Propaganda abounds on both sides. Neither the conservatives, who trumpet privatizing Social Security as key to individual power and the "ownership society," nor the liberals championing safety-net programs as support to help those who can't help themselves, have all the answers. The real answer will lie somewhere between both sides, in a compromise that both supports the individual as well as transfers power and responsibility to him. How do we adjust our financial planning since Social Security as we know it, is going to change? Social Security is not going away, but it will need to change as our society changes. No matter what your age, longer life expectancy increases the need to focus on good physical health and career planning to support working beyond age 65. This is especially important for folks under age 50, who could see the age at which they're eligible for full Social Security retirement benefits stretched out past age 67. Clients younger than age 50 are also rethinking their annual retirement savings goals to help boost the amount of money they'll have in retirement. Folks over 50 and especially those already collecting benefits will probably not see dramatic changes in Social Security benefits, but many are paying close attention to health care costs and planning in order to hedge against changes in Medicare benefits or lower future inflation adjustments in Social Security benefit payments. Now more than ever… Special News: We have strengthened our team and our ability to help you with your financial planning needs. In January, Lauren Gadkowski, Certified Financial Planner, joined Compass Planning Associates. Lauren serves her clients all over New England with a special concentration in corporate training and planning for clients in their 30's and 40's. Welcome Lauren! We Love Referrals! Our e-newsletter is a great way to introduce us to a friend who may be interested in financial planning issues or who may be looking for financial planning guidance. Please don't hesitate to forward our email along to anyone you'd like. --- Jennifer Lane Compass Planning -- Committed to educating and empowering our clients
We Love Referrals! Our e-newsletter is a great way to introduce us to a friend who may be interested in financial planning issues or who may be looking for financial planning guidance. Please don't hesitate to forward our email along to anyone you'd like.
-- Committed to educating and empowering our clients -- |
