Losing weight, eating healthier and exercising more are the main New Year’s resolutions for most Americans. Financial fitness should be another one, however most people don’t like thinking or talking about money and often neglect their financial health. Many incorrectly believe it is something that is covered by their retirement accounts or social security. However, social security should just be one part of your retirement plan. For instance, if you are born in 1960 or later your FRA (full retirement age) to collect social security is age 67. If you decide to withdrawal at age 62 your amount gets reduced by 30%. The current maximum social security benefit is $2,687 per month / $32,244 per year for a wage base of $127,200. For more details go to Social Security Administration 2017 Fact Sheet. To find out what your personal approximate payment will be based on your work history go to My Social Security. There is a Cost of Living Adjustment, but it does not increase at the same rate as inflation. Since 2010 we had 3 years with a zero adjustment (2010, 2011, 2016). In 2017 the increase is as low as 0.3%.
Now consider how much you spend annually and how much you will need when you retire. The difference will need to be substituted by your personal savings.
In order to find out if you are on track consider working with a fee-only financial adviser that can help you determine the amount of savings you will need by the time you retire. It is important to choose a fee-only adviser that has your interest at heart and not someone that sells you a product for a commission that might not fit your needs.
A fee-only adviser will try to understand your entire life. They will ask personal questions about you, your relationships, health, current investments, insurance, documents like wills and trust, spending needs goals and concerns. Just like a doctor an adviser needs a full accurate picture in order to see if there are any gaps in your plan.
For more information or a personal consultation please call or email us.