Social Security and Financial Plans

Proper planning is essential to a successful long range savings plan. A savings plan, in turn, is essential in guarding against an excessive use of credit and high levels of debt. One component of a savings plan that demands carefully consideration is social security payments.

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Social Security is a federal supplemental retirement income. An individual pays into the system based on a percentage of earned income. When they retire they are entitled to receive monthly payment benefits based on a percentage of their average income level over the course of their careers. Social Security is not, however, intended to be an individual. s sole source of income. It is extremely important to keep this in mind while creating a savings plan. Those who are planning to live entirely off of their Social Security benefits could be in for a rough ride. Many people find it extremely hard to meet all of their expenses with Social Security alone. This often forces an individual to drastically cut back their lifestyle or to rely more heavily on credit. Proper planning can prevent this situation from arising. The first step is to determine when you would like to retire and how much income you will need. Next, contact the government to receive a free copy of your estimated Social Security payments. 1-800-772-1213. (1)This figure will help you to calculate what additional funds need to be saved. Remember that if you decide to activate your benefits before your normal retirement age (this figure varies depending on your date of birth) then your monthly payments will be smaller. Conversely, if you decide to defer your benefits until after your retirement age then your monthly payments will be larger.

Although, people nearing retirement age will almost certainly be able to take full advantage of their social Security benefits this may not be the case for younger individuals. The current system is set to experience shortfalls by the year 2032. (2) As a result, many experts. advice younger members of the work force to completely ignore Social Security payments while making retirement plans. If the system is revised and money is available then it will be an added bonus but it is a smart move to be prepared.

2. http://www.afscme.org/publications/primetime/pt98204.htm

1. http://moneycentral.msn.com/articles/specials/3406.asp

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About the author:

Mark Carney is a professional consultant with First American Debt Consolidation and Loans, a debt consolidation service specializing in financial education, credit counseling, and debt management services nationwide.