How to Avoid Social (In)Security

NEW YORK - March 19, 2013 - PRLog -- We've all heard of the classic three-legged retirement income stool: pensions, social security, and personal savings. Unfortunately for many upcoming retirees, that three-legged stool only has one leg. That's personal savings.

In a Social Security Administration 2012 study*, 35 beneficiaries received benefits per 100 workers paying into Social Security (e.g., FICA) in 2011. In 2050, that ratio will get worse: we'll have 49 beneficiaries per 100 workers.

The Congressional Budget Office estimated* that beneficiaries in 2033 may get smacked by rising plan costs. Their benefits may be delayed, or not paid at all.

What about pensions? In 1989, 42% of private industry employees had pensions. In 2011, only 22% (and 1 in 4 of those plans were closed to new employees).

Both Social Security and Pensions promise to guarantee an income stream for the rest of a retiree's life. But it's clear these two legs are wobbly.

The last leg may also break for millions of Americans. In an Employee Benefit Research Institute 2010 study*, the average retirement account balance was $69,498. Considering that a healthly couple turning 65 this year faces -- on avreage -- over $300K in medical expenses, $69K in savings won't last long.

Beat the odds -- don't sabotage the last leg you've got in retirement.

• Put away at least 15% or more of your income into a tax-deferred retirement account.
• Ensure that your savings grow higher than the rate of inflation.
• Most importantly, understand and aim for the portfolio return that you need with the right amount of risk in order to hit your savings goal (which is why I wrote my book "How to Buy Stocks Online").

We only used to expect magicians to be able to balance on a one-legged stool. In today's world, however, it doesn't take magic.  It takes diligence and smart investment decisions.

* Sources:
• The 2012 Annual Report of the Board of Trustees of the Federal Old-Age and Survivors Insurance and Federal Disability Insurance Trust Funds, Social Security Administration, April 2012
• Long-Term Projections for Social Security, Congressional Budget Office, August 2011
• Study of Retirement Account Balances, Employee Benefit Research Institute, 2010

http://www.youtube.com/watch?v=tgvj0p-7CiY