Saturday, December 20, 2014

Happy Birthday Social (In)Security

Last week marked the 75th birthday of legislation creating Social Security.  While politicians traded barbs back and forth on how the other political party has ruined it, Social Security remains in dire straits. 

The reality of a program designed to provide a supplement to retirement income has morphed into a belief that social security in itself will fund your retirement.

Don’t hold your breath. There won’t be much left of social security to provide much retirement security.  Instead, consider these tips by The Money Coach (web, twitter) to decrease your reliance on Social Security:

  • Consider downsizing your home or relocating well before retirement 
    Most people downsize to smaller homes or relocate to less expensive parts of the country after the kids leave the house or when they retire. Do it sooner to shave housing costs dramatically — saving yourself tens of thousands or even hundreds of thousands of dollars that could be stashed into a retirement fund.
  • Pay down consumer debt quickly and think twice about taking on new debts 
    Having long-term debts, like student loans, credit card payments or car loans hinders your ability to save for the future. When you pay off these debts, you can start putting that money into your retirement nest egg.
  • Start saving and planning earlier 
    Stop the cycle of procrastination and don’t try to play catch up when you’re 50 or 60 years old, as most people do. Also, don’t buy into the notion that you “can’t afford” to save. Honestly, you can’t afford not to.
  • Get professional help
    Long-range financial planning isn’t rocket science, but it does help to have a reputable, trusted professional offering guidance and advice. 

Most importantly, The Money Coach reminds us:

No matter how preoccupied you might be with today’s bills and today’s concerns, if you fail to save adequately now, and count on Social Security as the sole source of your retirement income — or for the bulk of it — you could be making a very big financial mistake.

That’s advice you can tank to the bank.

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