The baby boomer generation is reaching the typical retirement age at the present time, with about 10,000 people applying for Social Security every day. The Social Security Administration expects this volume of applications to continue daily for the next 20 years or so as more boomers become eligible for retirement benefits year after year.
When you think about the word ‘retirement,” what does it mean? While it may have different meanings to different people, it should be understood that, at a fundamental level, it includes an assumption of the condition of being able to stop working. This means financially capable. It is not the description of something that you are necessarily entitled to by virtue of reaching a particular age.
What role will Social Security retirement benefits play? Yes, if you paid into the program throughout your life you will be eligible for Social Security benefits when you reach the age of eligibility. Under current law, that age will be between 66 and 67 if you’re not currently receiving Social Security benefits. That is a change from the age of 65 years which applied for a long time.
However, the amount of your Social Security pension benefits may be a disappointment. The average payout at the end of 2012 was less than $1300 per month. The maximum in 2013 is just over $2500 a month.
Once you are on Social Security you can’t expect much in the way of increases as the cost of living goes up. The cost-of-living adjustment for 2013 was just 1.7%. That’s an amount that you probably wouldn’t even recognize if you are applying it to a $1300 per month benefit.
To add to the above there are out-of-pocket Medicare expenses that seniors must pay, and they go up regularly. This offsets the modest cost-of-living increases.
Because many of them expected too much from Social Security a lot of of baby boomers are facing rude awakenings. A significant percentage will never be able to retire.
Don’t let this happen to you. It’s not necessarily too late for you to have a financially comfortable retirement if you are a Baby Boomer. Plan ahead for retirement while you still have time and stick to the plan so that you can enjoy your golden years to the fullest.
For help consult your financial advisor. Or contact us for a introduction to an advisor.