Financial Planning for January 2000

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Determining Your Retirement Benefits and Social Security
The Social Security Administration is mailing out statements showing estimates of the retirement, disability and survivor's benefits that workers and their families could be eligible to receive now and in the future. This is the largest customized mailing ever sent by a federal agency. If you have not received it yet, you should receive this statement about three months before your birthday.

Social Security officials hope this information will wake up workers and get them to think about retirement. The public has overestimated what Social Security will provide them. The statement will have a year-by-year history of a worker's reported earnings. This statement might panic a lot of people and rightfully so. The statement will contain:

  • A projection of the amount of monthly disability benefits a worker could be entitled to if he or she becomes disabled.
  • An estimate of the monthly benefit that a worker's family could receive if he or she dies.
  • An estimate of the monthly retirement benefits that a worker would receive at age 62; at the full retirement age, currently 65; and at age 70.
  • An annual breakdown of a worker's earning history. The total Social Security taxes paid by the worker and his or her employer over the employee's working career.

If you have changed jobs frequently, the more chances for error on your statement. Check to make sure the numbers on your statement are correct. Remember that this is not junk mail. This statement reflects the amount of your benefit. If you have old tax returns and paychecks, use these to look for any mistakes. If you have a discrepancy, call 1-800-772-1213. You will need to have the W-2 for the year you think may have an error. The agency also has a Web site


Use this statement to help save for retirement. Social Security was never meant to be the sole financial source of your retirement. Retirement planning should consist of Social Security benefits, personal savings and company retirement plans. Social Security should be around for generations but the form of this benefit will undoubtedly change. Your personal savings have taken on a whole new importance.

What kind of lifestyle do you want when you retire? Have you made the adjustment for the fact that you will probably live longer than your parents have? Today, 65-year-olds can expect to live another 15.7 years for men and 19.0 years for women according to the National Center for Health Statistics. One-third of all the people born in 1914, now 85 years of age are still alive. These statistics are ignored by many when planning for their golden years.

People need to revise their retirement plans and hopefully the Social Security statement will bring this problem to workers' attention. This statement will let you know if you have worked long enough to even qualify for Social Security benefits. You need to examine the amount of benefits the government says you will receive. The government assumes you will keep working and make the same amount of money as the latest earnings shown on their records. The results are therefore distorted because it does not factor in items such as raises. If you are close to retirement, then the statement will be fairly accurate. If you are 30 years old, many changes in your working life will occur that are unknown now. You can visit the Web site named above to get a statement that allows you to enter in your best guess of what you will make in the future. The statement for a younger worker is a conservative look at future benefits.

Social Security typically provides at least 15-20 percent of a person's retirement income with the maximum being about 40 percent. Under current projections, the fund will run out of money in 2034. Many people don't believe Social Security will be around to help them at all when they retire and don't even factor in these benefits when planning their retirement. They also realize a dollar figure shown today will not go as far in the future as it would today.

Hopefully this statement will wake up Americans to the fact that they need to be responsible for their retirement. The wait to inherit from your parents has also changed with the increase of life expectancy. Your parents could outlive their money and you could also end up taking care of your parents as an added financial responsibility. Open your mail, reset your thinking and remember you can't get a loan for retirement.


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