Cuts To Social Security Are Likely – What Kind of Retirement Strategy Should You Consider?

SPRINGFIELD, Ill. - April 12, 2013 - PRLog -- In continued compromise with the House of Representatives, Barack Obama has proposed to reduce cost of living adjustments for Social Security. The plan requires adjustments to be made to the way Social Security and various other programs are calculated, shifting to a “chained CPI”, rather than the current method of measuring inflation. The proposed change to the budget could  reduce the federal debt by $230 billion, however, seniors Social Security payments would increase at a slower yearly rate than they do currently.

The changes to seniors Social Security payments would be marginal at first. However, over time the change in payments could be in the hundreds or even thousands. Almost two thirds of Social Security recipients rely on these payments for fifty percent of their income or more. One third of seniors rely on Social Security for 90% of their income, so the decreases in the payments could end up being quite a shift for seniors as the years went by.

The current future of Social Security is ambiguous, and it now seems like it’s a better time than ever to begin preparing for your retirement on a personal level, rather than primarily relying on government assistance to get you through your retirement. The stock market can be a risky endeavor, and while the market has recently increased, there are no absolutes to guarantee that the market will continue to do well. When asked about the risks of the stock market, nationally known financial educator and retirement specialist, Dick Van Dyke of Annuity Rates Instantly (http://annuityratesinstantly.com) had the following to offer.

“The strategy here is to use non-correlated investments to avoid significant losses. When one sector or allocation of your investments are down considerably the hope is that another sector or allocation will likely be up. This has never proven to be a safe or reliable strategy to base a retirement income strategy on if the income need relies on the valuation of the majority of the assets in the portfolio for the income to remain stable. Markets change quickly and there are so many factors ranging from political, competitive,  global, war, natural disaster and even emotion to name a few. Unfortunately there are not adequate warnings to make changes at critical points.”

So what to do? Van Dyke suggests that you consider an annuity plan as a strategy for your retirement due to their relative safety compared to other retirement strategies. Van Dyke explains:

“Insurance institutions are required to demonstrate to state regulatory authorities that dollar for dollar a client’s money (premium) is safely on deposit in secure financial vehicles such as investment grade bonds or government bonds. In addition they are required to have reserves known as additional surplus reserves. The minimum amount of required reserves is decided based on the safety of the investments as determined by state regulators. So based on these stringent requirements insurance carriers are scrutinized and forced by law to meet and maintain a legal reserve for the safety of their clients.”

Many senior citizens are upset that their Social Security benefits may diminish, even though they have paid into this program throughout their working lives. Annuities offer a guaranteed return when you need it later in life, and laws are in place to ensure that insurance agencies have set aside enough money to make these payments. As the nature of federal aid and social programs change, individuals should consider alternative strategies to prepare for their retirement.

For more information on annuities and helpful tips for your retirement, please visit http://annuityratesinstantly.com.