I just love when the SSA issues press releases about preparing for retirement. I often share these updates with friends and young clients and get responses that involve emojis laughing hysterically. I get it. In our 20s, we are trying to finish school and get a good job. In our 30s, we are trying to start families, advance in our careers and purchase homes. In our 40s we are just trying to keep up with busy careers, mortgages, commitments, payments, etc. Once all of that seems under control, we worry about our children’s college tuition and our bucket lists! Romantic European vacation, anyone? We often put our long term future last on our list of financial worries. For many of us, it seems very far off.
So, I am proposing a challenge to those in their 30s and 40s! That challenge is simple. Do two small things to start thinking about your long term future. Ready for the list? It is easy, I promise.
1. Create an account via the Social Security website. Visit www.ssa.gov. Once there, select “my Social Security”. Setting up an account only takes a few minutes and gives you instant access to several important pieces of information. The SSA used to mail out statements concerning this information. Now, these statements are only mailed to those over the age of 60 who have not created an electronic account. Talk about a scary cut back. This change means that you are no longer reminded to review the information reported to the Federal Government concerning your earnings. It also means that you are not advised of your current benefit rates should you become disabled or reach retirement age. Create this account to ensure that your reported income for previous years is accurate and to establish a general awareness of what your benefit rates would be should you become disabled or reach retirement age. If you do find an error, you will need to contact your local SSA office and get it corrected. Trust me; it is a lot easier to correct an error the year it was reported than 20 years after it was made. If there are no errors, take a look at your benefit rates in connection with retirement ages. Think about that monthly income and whether or not you can consider early retirement, retirement at full retirement age (presently 67) or retirement at age 70. The system also provides data concerning survivor’s benefits and Medicare. Check it out, lots of good stuff to chew on.
2. This step involves just thinking and talking. That is it! On average, Social Security retirement benefits are only about 40% of a person’s pre-retirement earnings. Use this information to get the conversation started with your spouse. Are one or both of you paying into a retirement plan? Will one or both of you get a retirement through your place of employment? Very generally speaking, what do you think your monthly household income will need to be when you hit full retirement age? Will the mortgage be paid off? Will the kids be done with school? I want you to simply open up the discussion. You do not need to have all the answers today but starting a dialogue helps you get there. With that said, this discussion does not have to be one of stress and worry. Remember to discuss the fun things that you would like to do when you retire! Make sure your financial plan involves covering expenses associated with your dreams of post retirement travel, hobbies, etc.
With all of that said, if you are serious about getting things on track, contact a financial planner. They have the tools and resources to help you get prepared for your retirement. If you have questions about disability and retirement in relationship to one another, call me. I can ensure that your benefits from any and all sources of disability are well coordinated so that your long term future is secure.