Social Security Benefits.....

Social security benefits will rise up by a mere 1.5% in 2014 and in real dollars this translates to only $19 monthly.  Of all the expenses that seniors shoulder on a fixed income that $19 hardly begins to cover the disparity between needs and available funds. 

For those still in the planning and building stage of their retirement nest egg Congress’ recent inability to find common ground so that they can find resolutions to a growing list of issues is disheartening at best.  The assumed 70% of current benefits will certainly fall short of one’s needs.  To ensure there is enough funds to cover everyone receiving benefits suggested solutions range from a change in the retirement age to an increase in payroll contribution amounts.   At this stage there are plenty of suggestions being debated with no plausible chance of Congress implementing any of the suggestions any time soon.

While your social security benefits on their own are not enough to live on there are ways to increase actual amounts of your benefits by delaying the age at which you start receiving benefits.  Most people want to continue working as long as possible, especially those limited wealth. 

Options are to start claiming at age 62 but the penalty is a reduction of monthly benefits by about 25% less of what you would have received at your regular retirement age of 66 – 67 (age is determined by your year of birth).  Delaying until age 70 does, however, come with bonus of an additional amount which can be up to 8% being added to your benefits. 

There are no benefits to delaying Medicare – so at 65 remember to sign up.

For many years people spoke of the “three legged stool” as an ideal method of saving for retirement.  With current economic conditions we need to take a different approach.  Participation in your employer retirement sponsored plan is a must if offered even though very few employers offer pension any more.  Defined contribution plans are more popular now but these have a significantly lower benefit.  That along with an increase of your regular savings is also necessary.  You can also use your home – either by downsizing or selling it to avail more money for retirement.  Others opt for reverse mortgage as a way to raise fund during retirement.

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