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Category: Retirement Planning

Social Security: By the Numbers

Social Security has been a pillar of retirement life for several decades, but how much do you really know about it? Here are a handful of facts that might surprise you:

 

The Social Security trust fund exceeds the gross domestic product of every country in the world except: China, the United States, India, Japan, Germany, Russia, Indonesia, and Brazil.[i]

 

For 61% of retirees, Social Security is a major source of income.1

 

Benefits are subject to federal income taxes, but it wasn’t always so. Amendments to the Social Security Act made benefits potentially taxable beginning in 1984.1

 

Benefits are determined by your average earnings during a lifetime of work, based on your 35 highest-earning years.1

 

If you receive Social Security, you no doubt welcome cost-of-living-adjustments (COLAs) to your benefits. Did you know that Social Security COLAs once required an act of Congress? That was the case before 1975, when they were finally pegged to advances in the Consumer Price Index.1

 

In the middle of 2018, more than 1 in 6 Americans were collecting Social Security benefits. Older Americans constitute about 80% of Social Security recipients, and their average monthly benefit in June 2018 was $1,413.[ii]

 

When should you begin taking Social Security? That may depend on several factors, but many people choose to claim benefits as soon as they are eligible. You can receive benefits beginning at age 62, but if you take them before reaching Social Security’s Full Retirement Age (67 for those born in 1960 or later), your monthly benefit will be fractionally reduced. You can wait until age 70 to claim your maximum potential benefit.

There are many factors to consider when determining the age at which you should begin taking benefits. We believe this decision should be made in conjunction with your overall financial planning process.

 

We would welcome the opportunity to discuss this further or to begin a conversation regarding your financial plan and how Social Security benefits fit into the plan.  Contact CapSouth at 800.929.1001.

 

To read more about financial and retirement planning visit http://capsouthwm.com/services/financial-estate-planning/

 

Investment advisory services are offered through CapSouth Partners, Inc., dba CapSouth Wealth Management, an independent registered Investment Advisory firm. Information provided by sources deemed to be reliable.  CapSouth does not guarantee the accuracy or completeness of the information.  This material has been prepared for planning purposes only and is not intended as specific tax or legal advice.  Tax and legal laws are often complex and frequently change.  Please consult your tax or legal advisor to discuss your specific situation before making any decisions that may have tax or legal consequences.

 

This article contains external links to third party content (content hosted on sites unaffiliated with CapSouth Partners). The policies and procedures governing these third-party sites may differ from those effective on the CapSouth company website, as outlined in these Disclaimers. As such, CapSouth makes no representations whatsoever regarding any third-party content/sites that may be accessible directly or indirectly from the CapSouth website. Linking to these third-party sites in no way implies an endorsement or affiliation of any kind between CapSouth and any third party, including legal authorization to use any trademark, trade name, logo, or copyrighted materials belonging to either entity.

[i] https://www.waddell.com/explore-insights/market-news-and-guidance/planning/9-facts-about-social-security

 

[ii] https://www.cbpp.org/research/social-security/policy-basics-top-ten-facts-about-social-security

 

Certain Uncertainties in Retirement

The financial uncertainties we face in retirement may risk reducing our sense of confidence, potentially undermining our outlook during those years.

Indeed, according to the 2018 Retirement Confidence Survey by the Employee Benefits Research Institute, only 17% of pre-retirees said they are “very confident” about having enough assets to live comfortably in retirement. In addition, just 32% of retirees were “very confident” in their prospects for doing so.[i]

Today, retirees face two overarching uncertainties. While each one can lead even the best-laid strategies awry, it is important to remember that remaining flexible and responsive to changes in the financial landscape may help you meet the challenges posed by uncertainty in the years ahead.

 

An Uncertain Tax Structure

A mounting national debt and the growing liabilities of Social Security and Medicare are straining federal finances. How these challenges will be resolved remains unknown, but higher taxes – along with means-testing for Social Security and Medicare – are obvious possibilities for policymakers.

Whatever tax rates may be in the future, taxes can be a drag on your savings and may adversely impact your retirement security. Moreover, any reduction of Social Security or Medicare benefits has the potential to increase financial strain during your retirement.

Consequently, you will need to be ever mindful of a changing tax landscape and strategies to manage the impact of whatever changes occur.

 

Market Uncertainty

If you know someone who retired (or wanted to retire) in 2008, you know what market uncertainty can do to a retirement blueprint.

The uncertainties have not gone away. Are we at the cusp of a bond market bubble bursting? Will the eurozone find its footing? Will U.S. debt be a drag on our economic vitality?

Over a 30-year period, uncertainties may evaporate or resolve themselves, but new ones may also emerge. Solutions for one set of financial or economic circumstances may not be appropriate for a new set of circumstances.

Scottish philosopher Thomas Carlyle said, “He who could foresee affairs three days in advance would be rich for thousands of years.” Preparing for uncertainties is less about knowing what the future holds as it is being able to respond to changes as they unfold.[ii]

To read more about financial and estate planning, visit our website at capsouthwm.com/services/financial-estate-planning/

Investment advisory services are offered through CapSouth Partners, Inc., dba CapSouth Wealth Management, an independent registered Investment Advisory firm. Information provided by sources deemed to be reliable.  CapSouth does not guarantee the accuracy or completeness of the information.  This material has been prepared for planning purposes only and is not intended as specific tax or legal advice.  Tax and legal laws are often complex and frequently change.  Please consult your tax or legal advisor to discuss your specific situation before making any decisions that may have tax or legal consequences.

 

 

This article contains external links to third party content (content hosted on sites unaffiliated with CapSouth Partners). The policies and procedures governing these third-party sites may differ from those effective on the CapSouth company website, as outlined in these Disclaimers. As such, CapSouth makes no representations whatsoever regarding any third-party content/sites that may be accessible directly or indirectly from the CapSouth website. Linking to these third-party sites in no way implies an endorsement or affiliation of any kind between CapSouth and any third party, including legal authorization to use any trademark, trade name, logo, or copyrighted materials belonging to either entity

[i] https://www.ebri.org/docs/default-source/rcs/1_2018rcs_report_v5mgachecked.pdf?sfvrsn=e2e9302f_2

 

[ii] https://www.brainyquote.com/quotes/thomas_carlyle_118785

 

The Value of Insuring Against Life’s Risks

When you are planning for your future, what do you think about? You may think about your retirement, enjoying having the time and money to take trips and pursue your interests. Maybe you think about your home and enjoying the feeling of stability that can come with home ownership. In making these plans, people often find that their long-term view involves money, in some fashion.

 

That said, life also involves risk, and the unforeseen events that can change our plans in an instant. As an example, sudden injury or disability could leave you in a financial bind, unable to work for an extended period of time, if ever again. For this reason, among others, insurance can be an important tool in your pursuit to build and maintain your wealth and help protect it from unforeseen and destructive forces.

 

Did you know that:

  1. Sixty-eight percent of American workers have no long-term disability income protection,[i]
  2. Roughly 70 million Americans aged 18-38 have no life insurance,[ii] and
  3. About one in eight drivers is uninsured?[iii]

 

If you ask a homeowner, replacing a roof is probably the least satisfying expense he or she will ever face. While the value of such an investment is obvious, it doesn’t quite provide the satisfaction of new landscaping. Yet, when a heavy rain comes, ask that same owner if he or she would have preferred the nice flowers or a sturdy roof.

 

Insurance is a lot like that roof. It’s not a terribly gratifying expenditure, but it may offer protection against the myriad of potential financial storms that can touch down in your life.

 

The uncertainties of life are wide ranging, and many of them can threaten the financial security of you and your family. We understand most of these risks — a home destroyed by a fire and a car accident are just two common risks that could subject you to outsized financial loss.

 

Similarly, your inability to earn a living to support yourself and your family due to death or disability can wreak long-term financial havoc on those closest to you.

 

Insurance exists to help protect you from these forms of wealth destruction.

 

Some insurance (e.g., home or car) may be required. When it isn’t (e.g., life or disability), some individuals may be tempted to avoid the certain financial “loss” associated with insurance premiums and assume the risk of much larger losses that are less likely to happen.

 

But insurance premiums aren’t a financial “loss;” they are designed to help protect you and your family as you build personal wealth. Keep that in mind as you consider your coverage options and make decisions about your future; it’s possible that you are making a decision that could affect the rest of your life.

 

Investment advisory services are offered through CapSouth Partners, Inc., dba CapSouth Wealth Management, an independent registered Investment Advisory firm. Information provided by sources deemed to be reliable.  CapSouth does not guarantee the accuracy or completeness of the information.  This material has been prepared for planning purposes only and is not intended as specific tax or legal advice.  Tax and legal laws are often complex and frequently change.  Please consult your tax or legal advisor to discuss your specific situation before making any decisions that may have tax or legal consequences.

 

This article contains external links to third party content (content hosted on sites unaffiliated with CapSouth Partners). The policies and procedures governing these third-party sites may differ from those effective on the CapSouth company website, as outlined in these Disclaimers. As such, CapSouth makes no representations whatsoever regarding any third-party content/sites that may be accessible directly or indirectly from the CapSouth website. Linking to these third-party sites in no way implies an endorsement or affiliation of any kind between CapSouth and any third party, including legal authorization to use any trademark, trade name, logo, or copyrighted materials belonging to either entity.

[i] https://www.ssa.gov/news/press/factsheets/basicfact-alt.pdf

[ii] https://www.ajc.com/business/personal-finance/free-term-life-insurance-yep-thing-and-here-how-you-can-get/zzoBg0QQqRgjoBMAN1QfWM/

[iii] https://www.insurancejournal.com/news/national/2018/03/15/483414.htm

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