Social Security

Social Security refers to a set of benefit programs established and run by the federal government. The Social Security program is commonly identified with old age or retirement benefits and with disability benefits. The program was created in 1935 as part of Franklin Roosevelt’s New Deal initiative. Medicare and Medicaid are also social insurance programs established and administered by the federal government, but they are separate from Social Security. Social Security is a “pay-as-you-go” entitlement program. This means that current tax revenue is used to support current beneficiaries. In other words, there are no assets set aside to fund future benefit payments. When combined with demographic trends (i.e. an aging society), the pay-as-you-go funding approach is a feature that brings into question the sustainability of Social Security. Currently, Social Security is funded largely through payroll or “FICA” taxes which are a blend of employee and employer contributions that come from taxes on the wages of workers and the self-employed. Whether you’re employed or are self-employed, Social Security taxes amount to 10.4% of earnings, with the applicable earnings capped by a ceiling that is adjusted every year. The earliest age to get retirement benefits is 62, but the longer you wait, the higher the benefits. The average Social Security benefit in January 2012 is $1,229 per month. Social Security benefits are inflation-adjusted with increases pegged to the consumer price index (CPI). Social Security is the sole source of retirement income for 22 percent of beneficiaries, and the program is the majority (greater than 50 percent) source of retirement income for 66 percent of beneficiaries.

Longevity Risk Listed as Top Retirement Risk - "Biggest and Most Difficult to Figure Out"

A list of ten risks faced by retirees includes the obvious such as stock market risk , but also includes issues that may not be top-of-mind for many retirees such as inflation risk and interest rate risk . Longevity risk is at the top of the list. Immediate annuities and the longevity annuity are mentioned as a potential solutions to the risk of outliving one's assets: "Given that, what's the best way to manage that risk? Social Security, traditional pensions and payout annuities all promise to...

Immediate Annuities are a Critical Aspect of Retirement Planning

Article discusses the importance of immediate annuities--particularly in light of hedging longevity risk . Pros and cons of immediate annuities relative to other forms such as variable and indexed annuities are addressed. A solid article written by an attorney that is likely focused more on an advisor than a consumer audience. "The retirement crisis facing our country for the next 15 years is profound. The Social Security system is under great pressure, lifetime pensions guaranteed by employers...
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How Retirees Can Obtain a Free Loan from Social Security

The Center for Retirement Research at Boston College released a brief that discusses how to receive a free loan by deciding when to receive Social Security benefits. Retirees have an option to start receiving Social Security benefits: a) as early as age 62 but receiving reduced benefits; b) full retirement age (66), or; c) as late as age 70 which would result in higher monthly benefits. The wrinkle involved the law essentially providing one with the ability to change his or her mind. For...
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Consider Alternatives Such as Immediate Annuities to “Stop Risking Life Savings”

Article encourages partial annuitization through fixed annuities as a prudent approach to planning one's retirement finances. Even if you invest well and diversify your portfolio, you can't be completely sure that you'll outlive your money. That's where putting a portion of your assets into an immediate annuity can be useful -- by guaranteeing a stream of income for life, supplementing what you'll get from Social Security and any employer pension you might receive. Source: Motley Fool Full Story

Are the companies that provide annuity products safe in the current upheaval of the banking and financial services industry?

There has been a ton of recent discussion in the press about the financial health of life and

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