Easy ways for millennials to prepare for retirement

Millennials are in the best position for planning, investing, and saving for your retirement; growing that nest egg as large as it can be. The sooner you start, the more money you will have.

There are two easy ways to prepare for retirement at a young age and both involve Social Security- you know, that thing that Baby Boomers say won’t be there when you retire!

Start a my Social Security account. Having a personal and secure account is easy, but better yet, it empowers you. You can access the services you need in the convenience of your own home without traveling to a local office and waiting in a long line. To view your social security statement, go to www.socialsecurity.gov/myaccount.

As you can see, many of our resources are available online and my Social Security is one of the best places to access vital information about your retirement. We are constantly adding new features to make your experience with us faster and more convenient. You can even replace a lost or stolen Social Security card in certain states.

Did you know that a 20-year-old worker has a 1-in-4 chance of becoming disabled before reaching full retirement age? Social Security will be there for you if you become disabled and cannot work. Accessing your online account can also help you determine your estimated future disability benefits, so why wait. Get started!

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Knowing where you stand with Social Security

Have you ever wondered where you stand with Social Security? Recently Beth Kobliner, who is a personal finance journalist for the New York Times wrote an article to help us decipher this. Her article appeared in the March 23, 2017 NYT.

The article appears in its entirety here but you should check it out on the Social Security blog if you want more information.

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For most people, Social Security is a mystery. We see that 6.2 percent deduction on our pay stubs and wonder: What does it mean for my financial future? The answers: A lot. And not enough.

After tax season, take a few minutes to go online and read your Social Security statement. Even if your retirement is 30 or 40 years away, you need to know where you stand now. The Government Accountability Office tells us that nearly a third of households with members ages 55 and up have no retirement savings plan or pension in place—zip. That means Social Security is the only post-retirement pay they’ll get – and the estimated average monthly benefit for retirees (as of 2017) is just $1,360. (See what I mean by “not enough”?)

And women (lucky us!) have special reasons to worry. In a survey released in December 2016, the Transamerica Center for Retirement Studies reported that men claimed to have more than three times the retirement savings women have. Yes, it appears that the dreaded Pay Gap has a retired older cousin called the Retirement Gap. (Oh, and because women live longer than men, on average, you’ll probably need to save for two or three more years of retirement.)

To check up on your Social Security, log on to https://www.ssa.gov/myaccount/, and follow the instructions to view your Social Security Statement. It will show you how much you’re currently eligible for, depending on when you start receiving Social Security benefits. Your monthly benefit amount increases the longer you delay your retirement, up to age 70. People get a smaller monthly benefit if they take early retirement, at age 62, than they would get at full retirement age (67 for anyone born in 1960 or later). Keep working until you turn 70, and you’ll get quite a bit more each month in retirement. Your online Statement breaks it all down.

You can also find out the monthly amount you’re eligible for if you become disabled and can’t work – and whether your family qualifies for survivor benefits in the event of your death.

Confronting your Social Security status annually will give you a much-needed reality check. Could you survive on what the government will send to you each month? (The short answer: Don’t count on it.) How much – and how quickly – do you need to start saving in a 401(k) or IRA? (Hint: the maximum – now.)

So now you know. Social Security needs to be part of your annual financial checkup. Because inspecting the old safety net might inspire you to start saving now so you will have enough to fall back on in retirement.

 

Women need to understand their Social Security benefit…but that’s not all!

The Social Security Administration added the following post on March 13, 2017.  As we approach the tax deadline for 2017, I think it bears repeating. For the full blog post, see this link.

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One of the biggest mistakes people make is simply not taking the time or waiting too long to understand how the retirement system works. If you’re worried that you won’t have enough money to last throughout a longer lifetime, take action by doing something about it. According to a 2016 survey, only 40 percent of workers have gotten an estimate of their Social Security benefit amount and only 17 percent have a written financial plan.

While all Americans need to plan for their financial futures, it is especially important for women. Women face unique financial challenges like longer life spans, the fact that we traditionally earn less than men, and differing employment patterns from men. Women are more likely to work part-time and spend time out of the paid workforce to care for loved ones. These all usually lower women’s Social Security benefits and overall savings.

Women need to know the amount of their future benefits, and make sure they know the best time to retire. Married women need to know how widowhood and divorce affect their benefits. An easy way to do this is to sign up for a my Social Security account, and use your Social Security Statement as a planning tool.

Social Security provides the foundation, but you need to have other sources of income such as a work-based retirement savings plan. What about personal IRAs or other savings/investment accounts? If you are married, don’t forget to find out what retirement accounts your spouse has as well. The Women’s Institute for a Secure Retirement (WISER) has a worksheet Get Your Ducks in a Row to help you get started.

Do you know all the benefits you may be eligible for through your employer? A typical benefits package is often worth up to 25 percent of an employee’s income, and can include health, retirement, disability, life, long-term care, and flexible spending accounts. Read WISER’s brochure, 20 Ways to Take Advantage of Your Company Benefits Plan to learn more.

Finally, with tax season underway, now is the perfect time to get started. Grab those W2 forms to see how much money you are actually living off of each year, and then figure out how you, with Social Security benefits and other resources, can maintain financial security throughout your life’s journey. For additional resources, visit www.wiserwomen.org and Social Security’s People Like Me – Women’s page.