retirement planning tallahassee

Social Security and Pension Plans

by John Curry

Lately, we’ve seen a lot of news articles in the press, whether it be television, radio, newspapers, magazines, about government retirement programs, specifically Social Security and public pension plans. At one time in our country’s history, people focused on taking care of themselves. However, it seems today that we’re becoming more of an entitlement society. How many times have you heard friends or perhaps yourself say something like the following: “You know, I paid all this money into Social Security. The government has no right to even talk about reducing my benefits.” Well, this is what I mean by an entitlement society, and I think we’re all there.

I look at how much I pay into Social Security, and I say, “Wait a minute. Will it even be there for me when I’m ready to retire?” I believe it will be there, but I think that congress and whatever presidential administration is in office at the time must tackle this. The truth is, it should have been tackled a long time ago, but congress didn’t, and we the consumers, we the voters in this country, didn’t push them to do so, because it means taking benefits away from us. The truth is, all of us expect to receive something from Social Security, and why not? We paid a lot of money into the plan. Why shouldn’t we get that money back? However, I believe that all of us realize that something has to happen with Social Security.

Congress will have to eventually deal with this issue. They are going to have to either cut benefits for people or they’re going to have to increase tax rates or a combination of the two. I don’t know what’s going to happen, but I do know it must be dealt with. Heck, I’m not a politician. I don’t have the answers. I don’t even have all the questions, but I do know this. Something has to be done, and if those changes are very, very dramatic, it could help hurt us in retirement, so we have to do some personal planning.

While we’re on the topic of government benefits, what about company pension plans? You know, some companies have gotten into trouble and the Pension Benefit Guarantee Corporation has had to take over their pension plans. This has affected many industries. I don’t have to list the companies here. Just look at magazines such as Time, Newsweek, Business Week, the Wall Street Journal, USA Today, local newspapers. Article after article talking about pension plans being in trouble. And now we’re seeing it impacting people in the public sector. There’s talk, there’s pressure in the Florida Legislature, Ohio, California, other states in fact, to either eliminate or reduce the pension plans for state employees. I don’t think that’s the answer. I don’t think we take away the benefits, but I think something has to be done to ensure that the benefits that have been promised will be there in the future.

Let’s talk about people who do not have a pension plan at work, and that’s the majority of our population, by the way. If you don’t have a pension plan, how do you go about creating your own personal, private plan that would guarantee you an income that you could never outlive? That can be done by taking part of your income and investing it in some type of annuity program, whether it be an immediate annuity that gives you a lifetime income stream with no benefit to anyone but you or structuring it where there’s a lifetime benefit. This can be done.

In this short little vignette, I don’t have time to get into all the details of various products, but if you’d like to know more about that, feel free to give me a call or contact me by email and we can enter a discussion about that. But in the meantime, please think in terms of what the impact of reducing benefits with Society Security or a pension plan might have on you and look for ways to fill those gaps.

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