In their annual report, trustees for the government's Social Security and Medicare said today both programs are facing "enormous challenges."
The trustees warned that financial pressures will mount much sooner than projected, as Social Security and Medicare begin forking out more money than they collect in payroll taxes.
Medicare will be first to be hit. The trustees say Medicare will be paying more than it receives as of this year, whereas Social Security will start collecting less money nine years from now as the bulk of the babyboomer generation go on full retirement.
In a recent study, it was shown that most Americans don't know what their full retirement age is. Very few know, for example, that full retirement age is not 62, although one can start claiming retirement benefits at that age.
Social Security folks have a set of age brackets that determine your full retirement age. It could be 65, 66, or 67, depending on whether you were born before or after 1937, between 1938 and 1942, or between 1943 and 1955, and so forth.
Catch 22 situation
You may begin collecting Social Security checks when you reach the age of 62. However, Social Security bureaucrats warn you that if you cash in before your full retirement age, your benefits will be drastically reduced. They advise that you should think about pushing your benefits' claim to the age of 70, unless you don't mind if the value of your monthly check is trimmed by as much as 40 percent.
What the Social Security pundits are not telling you is that by the time you reach 70, if you ever do, there's a good chance that-- like all US-made bubbles -- Social Security would have simply evaporated. So I'd say: retire early and start collecting those checks while they last.
The other advantage of retiring earlier is that you collect benefits for a longer period of time. The Government wants you to wait, perhaps hoping that the millions of baby-boomers who are coming of retirement age this year would not force Social Security into insolvency sooner than expected.
Keep in mind that there are 78 million baby boomers who are going to start collecting their social security checks at the rate of 4 to 5 million new baby boom retirees per year. So, take a number and pray that you reach that window before the last call.
401(k)’s hidden fees
Over 80 percent of 401(k) investors have no clue as to how much they pay in fees. In most cases, the fees associated with 401(K) investments range from 1.2 to 1.6 percent taken from investors’ assets each year.
With inflation inching upward, some bad Mutual Funds’ bubble investments, and the dollar rapidly spiraling downward, 401(K) participants should brace for the smell of rot in their cherished nest egg.
What’s more disturbing is that 401(k) participants are seldom told or notified how much they are paying four their investments’ upkeep. One has to dig for the information in order to get it, like searching the summary annual report on the company's website for the total plan costs incurred during the year.
It is estimated that Americans have between 2.5 and $3 trillion invested in 401(k)'s. Just in case you wonder why the financial services industry keeps encouraging Americans to stash their disposable income away in 401(k)'s, you should know that those firms take in around $30 billion annually in fees paid by millions of mostly-unsuspecting investors.
No comments:
Post a Comment