Social Security

What Role Will Social Security Play in Your Future?

Since 1935, the Social Security program has provided guaranteed benefits for retirees. The program was only intended to provide supplementary income for retirees, in addition to pensions and personal savings. But today, one in three senior Americans relies on Social Security for at least 90% of his or her income.*

With maximum Social Security benefits now at $20,892 a year - the average retiree receives just $10,488 per year - this means many retirees are living on tight budgets.

The Demographic Dilemma
And if the low level of benefits doesn’t frighten you enough, consider this: many believe that the Social Security system may not be able to maintain this level of benefits in the future. A key factor affecting Social Security is a changing - and aging - American population. Over the years the pool of workers paying taxes to support the system has declined. In 1950, 17 workers supported each retiree. In 2003, the ratio is about 3.4 workers to one retiree. By 2030, the Social Security Administration predicts there will be only 2.1 taxpaying workers to support each retiree.

Secure Your Own Retirement
Regardless of what happens with Social Security, it makes sense to plan to provide for your own retirement income. The best place to start is with your retirement savings plan at work. By contributing the maximum you can afford to your plan, and by considering other retirement savings vehicles such as IRAs, you can help establish your own retirement security system. Think of any future Social Security benefits as a retirement bonus check rather than your retirement salary.

Social Security Statements
Each year, the Social Security Administration mails estimates of future benefits to all workers age 25 and older. This Social Security Statement can help you project your retirement income and your monthly retirement benefit, which will be useful as you and your financial advisor estimate how much additional income you will need from investments after you retire.

Keep in mind that the Statement’s figures are estimates based on a variety of assumptions including that you will continue to work and earn about the same salary as you earn now until retirement.

With that in mind, make the most of your Social Security Statement. When you know how much more money you’ll need to reach your retirement goal, you’ll be ready to take the all-important next step - planning how to close that income gap.

*Source: Social Security Administration

This information is for general educational purposes only.
Seligman and its representatives do not provide tax, accounting, or legal advice. Any tax statements contained herein were not intended or written to be used, and cannot be used, for the purpose of avoiding US federal, state, or local tax penalties. Please consult your own independent advisor as to any tax, accounting, or legal statements made herein. Retirement plan withdrawals made prior to age 59½ may be subject to taxes and a 10% penalty.

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