I'm sure you've heard a lot about the concerns with our present social security system. There are some major problems for us to consider. Read this article to learn what you can do to prepare for upcoming changes.

The problem...

I'm sure you've seen it in the newspaper and heard it on the news. It's a hot political debate and everyone seems to have their own opinion on the issue. It is a topic that has people in a panic. Just what will happen to Social Security in the future?

In the beginning, our social security system was designed to provide a small income source to seniors to help them with their daily expenses. It was instituted because many people weren't properly preparing for their futures on their own. What was started to only supplement a person's overall income has become the sole (or overwhelming majority) source of income for many seniors today. That is why it is so scary to think that social security could be nonexistent in the future.

There was one very important design flaw in the social security system. People working today are supporting those who are now using their benefits. This worked fine in the past where the number of people paying into social security exceeded the number taking out. We are rapidly approaching the point where the reverse will happen. Some studies show that by 2012, social security will be paying out more than it is bringing in. Something must (and will) change. Either taxes must increase, benefits decrease, or earnings on assets increase (or a combination).

What should we do?

That being said, many people today are reevaluating their retirement plans. Ibbotson, one of the premier investment analysis firms in the world, has recently addressed this issue in their article, ""Sign of the Times"". They mention that it may be necessary to increase the funding to your investment accounts to compensate for potentially lower social security benefits. According to their study and research done by the Employee Benefit Research Institute, about 44% of a current retiree's income comes from social security and only 33% from personal savings and investments. They forecast that a person working today might receive only 13% from social security and 69% from personal savings and investments. This is an enormous and alarming shift! Read this Acrobat file to learn more about the study.

Pension plans too!

Another alarming trend is with corporate pension plans. We have seen a trend of corporations phasing out their pension retirement plans. On April 18th, 2004 the SF Chronicle wrote an article that stated ""Even mighty General Motors struggled last year to come up with $19.3 billion for an aging army of 350,000 retired autoworkers."" Obviously if pensions continue to disappear, the general public will need to save even more through personal investments accounts.

The bottom line is this, we may need to begin saving more for retirement than ever before!

Suggested action steps:

1. Have a financial plan prepared to estimate your retirement needs.
2. Allow us to analyze your present investments to determine if they are appropriate for your goals.
3. Let us design a new investment program for you.