Dear Editor:
Just last month I read a new, highly respected poll which reports that “the average American today worries a lot about having enough money for retirement – more than he or she worries about such financial problems as paying bills, unexpected health care costs or making minimum credit card payments.”
As a Social Security employee, I was not surprised by that finding. Our statistical experts tell us that people can now expect to live 20 or more years after reaching retirement age – and that increase in longevity inches steadily upward. The only problem is that when folks think about living all of those years as senior citizens without their current paychecks coming in, they wonder where the money will come from And that is why my agency is working so hard these days to let people know that they can lessen their retirement financial worries simply by doing some retirement planning.
One of the best places to start is with the four-page Social Security Statement that we mail each year to every worker age 25 and older, about three months before the worker’s birthday. The Statement shows how much workers and their families can expect to receive from Social Security when they retire or if they become disabled or die.
The estimates in the Statement assume a person will work until age 62 and will make about the same amount of money as he or she has in recent years (with a slight inflation adjustment.) Of course, many people plan on working beyond age 62, or expect that their wages will go up quite a bit as they progress in their career. So these people may want to fine tune their Social Security benefit estimate by using the benefit calculators at our website – www.socialsecurity.gov/planners/calculators.htm.
But whether workers choose to use Social Security’s retirement planning calculators, or only take a few minutes to study their Statement, most will be comforted by the fact that they can depend on a solid financial foundation from Social Security in their retirement years. For the average worker, Social Security will replace a little more than 40 percent of his or her pre-retirement earnings.
However, financial planners usually say that a person needs between 70 and 80 percent of his or her pre-retirement income to live comfortably in retirement. The difference between what Social Security will provide and what is needed for a comfortable retirement can come from pensions and personal savings or work.
Unfortunately, only half of today’s retirees have a private pension. And too few Americans save as much as they should. But because everyone’s personal financial situation may be little different, the answer to a few simple questions can be useful:
Do you work for a company that provides a private pension, or 401(k) plan?
Have you already started a retirement savings account?
How long will it be until you plan to retire?
What do you plan to do once you do retire?
If you take the answers to these questions and study your Social Security Statement, you should be able to come up a workable retirement savings plan And that really can mean the difference between having the retirement you dream about and the retirement you worry about. Richard Thayer,
Social Security Manager, Jersey City