[Noozhawk’s note: One in a series of Social Security-related columns by AmeriFlex representatives. Click here for a related article.]
Q: What needs to be considered when planning retirement?
A: If everyone started planning for retirement in their 20s, the retirement planning process and certainly our retirement years would be different. The reality is most people do not begin funding their retirement until their 30s, 40s or in some cases their 50s. Social Security, while providing income in retirement years, should not be relied upon as the main source of a person’s retirement income.
Consider, for example, the maximum benefit a person retiring at full retirement age in 2013 can receive is $2,533 per month. The average national monthly cost for assisted living is $3,450 month. A clear shortfall.
Although a very important source of income, Social Security was never intended to be the sole source of income for people. As President Dwight D. Eisenhower said, “The system is not intended as a substitute for private savings, pension plans and insurance protection. It is, rather, intended as the foundation upon which these other forms of protection can be soundly built.”
In planning for retirement, it is critical to consider the present and the future, even those issues which may be hard to imagine and harder to discuss.
A retirement plan needs to account for all possibilities. Family longevity, long-term care, current and future living expenses, all sources of income, and insurance coverage need to be discussed so that Social Security is a supplemental source of income as much as possible and not the primary source of relied upon in future years.
Readers: Email your Social Security questions to bibi.taylor@ameriflex.com.
— Justin Anderson, CFP, CRC, CLU, is a financial planner and Bibi Taylor, MBA, is the Social Security project coordinator at AmeriFlex, 3700 State St., Suite 310, in Santa Barbara. Call 805.898.0893 for more information. They teach a course called “Savvy Social Security Planning: What Baby Boomers Need to Know” through Santa Barbara City College’s Center for Lifelong Learning. Financial advisors and registered representatives associated with AmeriFlex Financial Services offer securities and advisory services through SagePoint Financial Inc., member FINRA/SIPC. Insurance services offered through AmeriFlex Financial Services, which is not affiliated with SagePoint Financial Inc. or registered as a broker-dealer or investment advisor. Registered representatives may only discuss and/or transact securities business with residents of the following states: AR, AZ, CA, CO, FL, GA, IL, IN, MI, MO, NC, ND, NJ, NM, NV, NY, OH, OR, PA, PR, SC, TX, VA, WA, WI.