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Wednesday, September 26, 2012

Social Security's unknown future and 401(k) investing

Retirement accounts are supplemented by Social Security income
COLA increases and increasing retirees leave future entitlements underfunded
One of the great political questions of our day is whether or not Social Security can be saved, and if so, how?


There are many competing voices in the press, from financial advisors, the elected officials on Capitol Hill, and other politicians, about what is the best solution for the ills that plague this government institutionalized program that began under President Franklin D. Roosevelt. It is crisis time for many Americans who depend on their monthly disbursements, and all they want is a reasonable and sustainable solution that will guarantee them that the money they were forced to place in this system actually returns to them.

What was Social Security supposed to provide?

Many millions of Americans rely on social security benefits to meet their monthly financial needs, and most aren’t swinging from grand chandeliers in palaces of gold. Social security was never intended to be the sole providers of retirement income. In the past, family members, churches, and communities banded together to take care of the aged members of society.

Over time, since the Great Depression, the government saw and took an opportunity to tell people that they were unable to save, invest, and provide for themselves.  Instead, the government would take part of their income and sock it away until one turned 64 and they then would get their money back in monthly increments. This is not an investment but a taxation, mind you. Congress has used this money for years for other purposes, radically depleting the social security account our nation is supposed to maintain. Both major political parties have varying solutions to the problem without confessing that they are the problem. It has become a piggy bank that simply does not get repaid. “Just print more money,” seems to be their mantra.

Affect of the Babyboomers 

Now with our aging population, suddenly concerns about the veracity and sustainability of social security have come to the forefront of political talk and rightfully so, our population is worried.

For many who have seen their 401(k) accounts melt away in the radiant remains of the current economic downturn, their government check each month has increased in value and importance to them. New strategies have had to be employed as worry and fear about being able to continue a certain quality of life have run head on into the reality of their former dreams and goals about retirement.

Hope is still alive

Still, opportunities exist for those who are seeking to rebuild their 401(k) so they are able to still fulfill their retirement dreams and goals, but it will take finding the right financial advisor. Rock Hill retirement planner Matthew Griffin suggests that relying on your company’s 401(k) manager is not wise because their job is not to help you plan for your future and they typically are not investment experts.  This new era requires a steady and sober approach to the marketplace if one is to rebuild their accounts and get back on course. He also suggests that people under 40, who still have more time to rebuild than those who are older, should not allow that extra time to make them unworried.

Griffin suggests you take hold of the freedom we have to be more in control of your economic future, especially since social security may not be around by the time that age group retires. It is less about being aggressive in the marketplace than being wise with your future. Let your money work for you. Regardless of what plan Congress finally decides on, social security will never match private sector growth (or the potential of its losses) but with a little help from a financial advisor, you can climb the mountain of your future goals with confidence and hope. 

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