Why Do I Need To Save? Surely The Government Will Look After Me?

It is true that the government has and will continue to look after people. After all, you pay your taxes and make your social security contributions, right? That being the case, then, there is very little point in putting away for retirement savings and you may as well spend up big. After all, you will be looked after, so why bother going without, and saving? Well, the truth in many ways depends on your situation. But consider the following before continuing to spend away your retirement:-

1. Thanks to improvements in medicines and living standards, we’re living longer, healthier lives. This is great news, but it also means we may have to make our money last longer in retirement.
2. The CIA, in its World Fact Book, states that ”people in the United States can expect to live until they are 78 years old.”  But see point 1, and especially if you are in your twenties now, by the time your retirement nears, it is likely that you will live longer. If you are a female, chances are you will have a few more years on top of this.
3. By living longer, this means a greater sum will need to be available for retirement.
4. The number of people aging in America, like other countries is increasing.  There was 39.7 million in 2009 (12.9% of the population) and by 2030 the Administration of Aging group considers there will be 72.1 million which by then  will be 19% of expected population.
5. For a couple aged 65, there is a 50% chance that at least one partner will live to 98 in Australia, according to Challenger Financial.
6. There was a COLA for Social Security benefits (Cost of Living Allowance) approved in 2011 of 3.6% for 2012 but that was the first raise since 2009.  Do you wonder what inflation was over that same period?

Lots of numbers, but the government will still look after me, ok?

Yes they will, but there will be lots of other people to look after as well. What this means is that benefits are not likely to keep pace with inflation; are likely to become means tested, and if you think there is red tape now to get on board, wait a while. But that’s not fair; I have paid in my contributions all my life! Fair has nothing to do with it. Ask anyone involved; there is not going to be enough to go around, and it will get tougher.

In early 2011, the average monthly Social Security benefit paid to a retired worker was $1,177. This amount changes regularly and is based on a calculation that considers the total amount paid and the number of recipients. Is this enough for you to live on? What if you live another 10 years?  What if you or a near one get sick and needs more care than your hospital cover will provide?

OK, by now you may not be feeling so great about all this, but if you are still reading that means you are interested.  So what can be done?  The answers are complex and vary according to what other financial activities are in your life. But the message is clear. You need to plan, you need to get involved, and you need to seek the opinions of more than one adviser. A good place to start is the Social Security Planner. There is a lot of material online, and there is help available through financial planners and retirement advisers. Words to the wise though; do your homework first. It is confusing; it is difficult; but it is your life and your future.

Before parting with any cash or signing up for anything, ask around. There is a lot of free help available, and after hearing what to do from a number of sources, you will start to see a common thread and work out what works for you. Have a look at USA government retirement information resources where there is some good information to help you estimate your retirement benefits and to learn about factors that could affect your retirement.

So where to from here? Whether you are retiring soon, or just in your twenties, the sooner you get a plan and understand the possibilities, the more likely your retirement will be just as you imagined, and likely to be even better! By sitting sound and waiting for whatever comes, you may be more than a little disappointed. The choice at the end of it all is yours. Go on; get involved, you have earned it!

Byline: Albert Ramirez is a term life insurance expert. In addition to no medical exam life insurance, he provides great insight for people looking to get the most out of their life insurance policies.