I just got my latest statement from Social Security in the mail yesterday. Commissioner Michael J. Astrue wrote the cover article entitled What Social Security Means to You. In a nutshell for me, the answer seems to be"not much" unless something changes.
My full retirement age is 67 years old. That is in 2043. However, Commissioner Astrue wrote in his letter that, "Without changes, by 2041 the Social Security Trust Fund will be exhausted and there will be enough money to pay only about 78 cents for each dollar of scheduled benefits."
I'm not 100% sure what that means. "Exhausted" sounds like it will be out of money, but "78 cents for each dollar of scheduled benefits" sounds like I just won't get the full amount the statement is telling me that I'm eligible to receive when I'm 67.
Actually, inside the statement it has an asterisk by my estimated retirement benefit amount. Down below, it says, "Your estimated benefits are based on current law. Congress has made changes to the law in the past and can do so at any time. The law governing benefit amounts may change because, by 2041, the payroll taxes collected will be enough to pay only about 78 percent of scheduled benefits." That makes it sound like I could get something. But I'm still missing the full benefit by 2 years!
Either way, I'm not counting on it. I think of any money I will collect from Social Security at retirement as my bonus money. I've never been in a job that has paid a bonus, so that will be really nice -- to be retired and receive a bonus!
Commissioner Astrue also wrote in the statement that, "Social Security is the largest source of income for most elderly Americans today, but Social Security was never intended to be your only source of income when you retire. You also will need other savings, investments, pensions or retirement accounts to make sure you have enough money to live comfortably when you retire." I believe that, and I'm acting on it -- socking away as much as we can for retirement.
It is frustrating when I think of all of the things I want/need to do with my money. There's just not enough to make everything happen perfectly...and that's for a relatively simple life. But there's one thing I know for sure: I want to be able to retire and live comfortably during retirement. So, I'll keep saving for it.
In the meantime, I'm off to the grocery store and Target now with my list of sale items and coupons. I'm continue to pinch my pennies pretty hard in order to stretch them further. I want to meet as many of my financial goals as possible...with lots of effort, hopefully I will.
Sunday, November 9, 2008
What Social Security Means to You
Wednesday, October 1, 2008
Calculating Your Tax Savings
*** Update: 10/3/08: It's been brought to my attention by a financial planner/Save 4 Fun reader that the Additional Annual "Catch-Up" Contribution for Employees Age 50 & Over function on this calculator is not up to date. For 2008, the maximum is $5000. However this calculator will only allow a maximum of $3000 for the "catch up" contribution.
I finally found a simple calculator that tells how much I will save in taxes now based on how much I put into my 403(b). (In case you didn't know, a 403(b) is the same thing as a 401(k), but the former is for non-profit organizations while the latter is for for-profit companies.)
So, if you are looking to put money into your employer's pre-tax retirement saving plan, check out this calculator. You will realize that you won't be parting with as much as your money right now as it seems.
Using the figures that the calculator has as its default settings, if you earn $50,000 annually, pay 5% in state taxes, are married and file jointly, and put 6% ($125/month) into your 401(k), you are really saving $25/month in taxes! That's $300 savings for the year!
In this example, increase your contribution to 10% of your gross paycheck, and you'll save $1000, annually. Better yet, put in 15%, and you'll save $1500 for the year! (And in the case of 15%, you'll have socked away $7500 for the year for retirement.)
You can use this calculator to figure savings if you use other pre-tax benefits too. For example, my husband just signed up with his employer to have his Metro fare taken from his paycheck pre-tax. He'll be saving $25.50 each month in taxes by using the pre-tax payroll deduction over going to the machine to buy fare for the bus and subway. That's $306 for the year! Trust me, we can think of far more "fun" things to do with that $306, than paying it to Uncle Sam for Michael to get to work.
Friday, November 9, 2007
No Retirement Fund for Britney
I don't know about you, but I'm pretty tired of hearing about Britney Spears and all of her problems lately. However, when I came across the Britney article on Money.com, I did actually read it. According to the article, she has yet another issue: the girl's got no savings or investments. With a net worth of about $100 million, I wonder if she needs it. However, if the reports are true that she has super big spending habits (and in my mind anyway, a questionable future for her career), she might want to consider it. Maybe toning down the lavish lifestyle would help her life in some other ways too.
Regardless of what I think of Britney, this article is a clever way to get people, especially younger ones, thinking about retirement savings. If you are into pop culture and need a little help thinking about your 401(k), here's a good place to start.
Monday, November 5, 2007
36 More Years
Last week I was on vacation. I stayed in town but had a terrific time touring DC and getting some things done around the house. It was great! (Look at how beautiful the Capitol is -- I never get tired of visiting it.)
