Some investors rightfully wonder how their own retirement accounts work with their Social Security benefits. In cases where company employees sign on for sponsored retirement plans like IRAs and 401 accounts with an employer match, it is hard to pass up the free investment money, so the vast majority of employees in these cases go ahead and contribute at least the minimum required amount each week to capture their employers' contribution. But this leaves some wondering what these accounts have to do with their Social Security benefits, and how the two will work together when they actually do retire and quit the labor force.
Advisors Help Project Retirement Income
When you sit down with a financial advisor with the specific goal of working out your retirement income goals, the first thing you will have to do is take a look at the accounts you already have. A comprehensive look at your current portfolio will include analysis of those company IRAs or 401k accounts. But it will also include a projection of your SSI benefits based on what you have paid into the system up to the current date.
Many people point out that this social program may not be on the most stable ground, and younger investors especially find it troublesome to count on these government benefits as a part of their projected retirement income. But it has to be taken into account somehow. Some folks choose to pretend it is not there or to regard it as something that may or may not exist by the time they are done working. But at the very least, it is wise to do projections with and without including Social Security income. To this date, there is no indication of the system failing, and thus no reason to assume that it will not be there. A more responsible investor will be a flexible investor. If you have doubts about the long term solvency of any part of your portfolio, put strategies into place to deal with shortages and be sure you are not relying too much on any one investment to get you through.
A Road Map to Retirement
Working with an advisor on your retirement strategy can involve a number of different things, some of which depend on your age and how far from that last day of work you might be. If you're already close to retirement, your emphasis will likely be on shoring up your portfolio, making choices on strategic withdrawals to reduce tax liabilities and increase income, and making sure you have created enough wealth to live on for the remainder of your days. A younger investor not so far along that road to retirement may need help just getting a vision together on what they want their retirement portfolio to look like and what kinds of investments they wish to focus on in the years to come. Regardless of what stage you are at, your qualified financial advisor can help you to set goals and show you how to reach the, in the most efficient manner.
Answers to Social Security Questions
A smart investor will set up retirement investments that intelligently coordinate with Social Security. Once you know when you will be able to begin taking payments on your Social Security and you have a good idea how big those payments will be, you can work with your advisor to fill in your needs with supplemental payments from your company pension, IRA, 401k or other individual or company sponsored investments.