On this new episode of the Retirement Solutions Show, the team at Oakmont discusses the future of Social Security.
Federal officials are warning that our Social Security Trust fund will run out of money in 2035. Being only 16 years away, a lot of our listeners will be collecting their benefits by then.
In our first segment, we discuss how this warning might affect current workers and retirees. We also share how younger workers can prepare for the possibility of receiving a significantly reduced benefit.
Here’s what you’ll learn from this segment:
- [2:29] Around 20 million households have nothing but Social Security to carry them through retirement. There’s no doubt that shortfall would have devastating effects on the people who rely on their benefit as their sole source of income. It could be time to start planning outside of the Social Security cocoon. We share ways to understand your budget and expenses and how you can find more cost-efficient versions of the things you enjoy.
- [5:58] 2035 is only 16 years away. That means that anyone below the age of 52 today is on track to receive only 70% to 80% of their scheduled benefits. Additionally, people who are retiring in 2019 at age 62 will see benefit cuts kick in at age 78. We share advice for these groups who may not receive their full scheduled benefit.
- [7:00] Fear plays a huge factor in retirement planning. Often times, it leads people to kick the can down the road and inhibits people from planning at all. We share how we help alleviate fear so that people can plan for a successful retirement.
More key takeaways from this episode:
- [9:04] A recent Kiplinger article talked about the different kinds of “safe income” you should have in retirement. What does it really mean to say that one type of income is “safer” than another? Can we trust the institutions that offer this type of deal?
- [11:10] The 4% withdrawal rule is a rule of thumb we hear about how much money you should take from your retirement account each year. Does this rule really work?
- [15:55] Forbes magazine claims that $1 million isn’t enough to fund a 30-year retirement. We share a client scenario where $1 million was more than enough and another where $1 million would’ve run out in the blink of an eye. This goes to show they every situation is different.
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- [34:04] Matt Danner the estate planner joins us to discuss why the fear of mortality can sometimes cause people to avoid the estate planning conversation.
- [44:41] A new report from United Income finds that the number of people choosing to work past traditional retirement age has doubled since 1985. The study cites inadequate savings, disappointing Social Security benefits, and high healthcare costs as the main reasons. Some people need to work past 65, but we share how we’ve helped people who have enough money, but keep working because they’re not sure that they do.
- [48:45] There are a number of strategies we can use to reduce our tax burden when we retire. We share why you should have a tax strategy that benefits you, not the IRS and how you can start repositioning your accounts.
Links mentioned in this episode:
- The 2019 Annual Report of the Board of Trustees of the Federal Old-Age and Survivors Insurance and Federal Disability Insurance Trust Funds
- How to Boost Retirement Income by Making It Safer
- Why Retiring On $1 Million Isn’t As Good As It Looks
- America’s Elderly Are Twice as Likely to Work Now Than in 1985
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