Financial Planning is not just for people nearing retirement. In fact, it is a good idea to begin planning for a comfortable and secure retirement when you are young.
That is why Social Security has a new financial planning tool especially for the 25 to 35 crowd. It is a special mailer with information about Social Security, savings, and other items of interest to young workers. If you are between the ages of 25 and 35 and you work and pay Social Security taxes, you should get this automatically with your next Social Security Statement.
Social Security is the foundation for a secure retirement, but was never intended to be your only source of income when you retire. While Social Security replaces about 40% of the average worker’s pre-retirement earnings, most financial advisors say that you will need 70% or more of pre-retirement earnings to live comfortably. Even with a pension, you will still need to save. If you will not have a private pension, you will need to save more — and start saving sooner. Today’s young workers can expect to spend 20, 30 or even more years in retirement, so saving is critical.
Want to start planning your future? There are some easy ways to do so. Take a look at Your Social Security Statement, which you should receive in the mail about two to three months before your birthday, as well as the helpful two-page insert tailored specifically to workers ages 25 to 35.
Pay close attention to the information provided, including tips on saving, getting your employer to help with matching contributions to retirement plans, and how much of a difference beginning to save early can make. There is even a graph showing the significant difference saving over time can make, even if it is just $25 or $50 a week.
The insert also includes helpful links to outside websites that can help you. For example, you can go to HYPERLINK “http://www.mymoney.gov” www.mymoney.gov for information on getting credit, paying for education, buying a home, creating a budget, starting a business as well as financial calculators and planning tools. Or, visit HYPERLINK “http://www.federalreserve.gov” www.federalreserve.gov for a worksheet that will help you establish a budget to meet your financial goals. These and other financial links on the insert will help you become the master of your own financial future.
Do not forget that Social Security coverage is not just for retirement, but also for disability and survivors benefits in the event that you are unable to work, or you leave behind a family that depends on your income when you die. Read more about retirement, disability and survivors benefits at HYPERLINK “http://www.socialsecurity.gov” www.socialsecurity.gov.
By: Matthew M. Wallace, CPA JD
Published edited January 31, 2010 in The Times Herald newspaper, Port Huron, Michigan as: Young adults need to plan