Social Security: The Retirement Program We Love to Hate by Ken Mahoney www.thesmartinvestors.com

While it’s not perfect, Social Security can play an important role in funding your retirement. The longer you wait to begin collecting, the larger each monthly check will be. But the sooner you start, the more checks you’ll get.

Which is best for you? To decide, you need to consider such factors as whether you’ll continue working and earning past retirement age. If so, Uncle Sam will give with his right hand, and take some back with his left!

An imponderable to ponder is your state of health. In general, the break-even point … when you would have collected more by waiting until your full retirement age … comes at about age 78. If you live longer than 78 years and you collect more by waiting. On the other hand, if you live less than that, you would have been better off collecting earlier!

If you haven’t already received it, contact the Social Security Administration (800-772-1213 or www.ssa.gov) to request your “Personal Earnings and Benefit Estimate Statement.” Fill it out, return it, and in about a month you’ll get an estimate of your future benefits.



The Real Social Security

If you think about it, the idea of retirement has only existed since the mid to late 19th century. Before this time, you worked until you became too old, too ill, or you died. If you were the breadwinner for the family, those who depended on you moved in with other family members for support or ended up living in poverty. Then about 80 or 90 years ago, during the Great Depression, Social Security was created. It paid the primary worker a retirement benefit in a lump sum when they reached the age of 65. In 1940, however, the lump sum payment turned into monthly benefit checks.

While many may think of Social Security as a replacement of their working wages, this was never intended to be the case. The purpose of Social Security is to supplement savings to live in comfort for the rest of your days. At that time quality of life was much lower and life expectancy was much shorter, so this thought may not have been way off base. Now, however, things are different.

Our quality of life has gotten much better and few expect to carry out this lifestyle through our retirement years. The quality life we have attained comes with a relatively expensive price tag. And now you have to decide how you are going to pay for it.

For example, John Collins is an average 65-year-old who is planning to retire and fund his only source of retirement is his monthly Social Security benefit check. His current annual salary is $40,000 and he is taking full retirement when he reaches 65½.

The Social Security Administration website has a calculator on its website for calculating monthly benefits. Using the calculator located at www.ssa.gov/planners/calculators.htm, John’s estimated monthly benefit is approximately $1,101 per month, which is approximately 1/3 or ¼ of the salary John is brining home now.

Here is an estimate of John’s expenses. Unlike some, John has completely paid off his mortgage and does not currently have any credit card balances.
Car payment.....................250.00Power/Gas Utility..............100.00Telephone...........................40.00Insurance (home/auto) .....150.00Cable/water.........................50.00Food/Groceries..................300.00Gasoline...........................50.00

His total monthly expenses are $940, which means John has $161 left over each month for any other expenses that may come up, like health insurance. John can apply for Medicare, but this can cost him up $200 per month, which means he is out of money.
This is just one example of a fictional character. You can use the Social Security Administration calculator to approximate your own monthly benefit checks.

But using this example, you can easily see how Social Security alone may not be enough to cover everything during retirement. John, for example, will not be able to live on his Social Security check alone. While there may be some ways John can cut his expenses, more than likely, he will have to find another source of income in order to live out his retirement years in some kind of comfort

Green Shoots and Weeds: Both Are Now Growing In the Economic Garden

By Ken Mahoney

www.thesmartinvestors.com

In the past several months, a number of economists have been writing about “green shoots” (signs of any growth) in our economy. There have been indicators that the economy, while still contracting, is contracting at a slower rate.

Since World War II, recessions in this country have generally been mild and referred to as “garden variety”. The current recession does not appear to be of the garden variety type – it may be deeper and longer than anything we have seen in the last 70 years.

There has been a market rebound of sorts, or “green shoots”, but we are still faced with the unwanted “weeds” that have infiltrated the housing, commercial real estate and rising unemployment sectors. Many economists believe that unemployment will rise above 10% and when we do recover that it may be a jobless recovery.

Also among the “weeds” of concern is rising inflation. While inflation is always a threat, the current environment is one of deflation or falling prices. It is difficult to see inflation with the decline of earnings and the rise of unemployment. The risk of inflation should always be monitored but presently it does not appear to be a threat.

On the other hand and despite the economic uncertainty we are experiencing there is, as with every investment environment, always opportunity. One should consider researching the municipal bond market. Municipal bonds are issued by states, cities, and counties, to raise capital for public work projects and are generally exempt from federal and state taxes. As tax rates continue to climb to pay for government-sponsored projects, municipal bonds may be more in demand.

Also, during past market cycles, “smaller” companies (small cap) tend to outperform “larger” companies (large cap). Smaller companies tend to have more flexibility, can change quicker, tend to have lower debt ratios and are more adept at taking advantage of market opportunities than their larger counterparts.

We will have to continue to watch the relationship between government and business. The administration has been aggressive with policy, from TARP to TARF. It appears, at times, to be friendly but also over-reaching. Some of the uncertainty in May was a result of several of the banks’ efforts to return TARP money only to have been rebuffed.

A number of the government’s efforts will take awhile to filter through the economy. The Fed's decisions tend to move though the economy quicker than fiscal stimulus, so perhaps in the second half of 2009 we will continue to see more “green sprouts” take hold and fewer weeds.

SWINE FLU UPDATE: ROCKLAND COUNT STILL AT ZERO by Ken Mahoney

A half-dozen new cases of swine flu have brought the New York State total to more than 210. State health officials say 167 of those are in New York City. Several new cases are reported in Westchester County this week, bringing the number there to twelve. As yet, there are no confirmed cases of the H1N1 virus in Rockland,

ENGEL PLEDGES MORE HELP IN FIGHT TO STOP ROCKLAND OVER-FLIGHTS by Ken Mahoney

Congressman Elliott Engel has pledged his continued support for efforts to block the Federal Aviation Administration’s air-space redesign plan. That plan would re-route hundreds of flights daily over Rockland and other suburban counties in Connecticut and Pennsylvania. Engel says he’s petitioned Transportation Secretary Ray Lahood – and even President Obama – to stall the plan. Rockland made its case at a federal court hearing on Monday. The court is expected to rule on the plan by the end of the year.

Bold Moves Can Be Exciting, But Often FruitlessBy Ken Mahoney

Take a long-term approachEver been on a crash diet? Even if you lost the weight, you probably put it back on afterwards, right? As in all worthwhile changes in life, your financial well-being will come about through long-term planning and by taking lots of little steps on a consistent basis over time. Bold moves are exciting, but often fruitless in the end. It’s never too late to learn new behaviorsEven people who lay out careful financial plans encounter new factors – like changing tax laws – that force them to revisit their plans.

Take a step back and consider the state of your finances today. Do you have a balance between cash, growth investments, and savings? Do you know what your needs will be a year from now? Ten years? Will you be prepared? Are your estate planning documents available, should your family ever need them? Past mistakes can be rectified and future mistakes can be avoided. No matter how jumpy the market is, you can be secure and relaxed. You just have to teach yourself to be that way.

Start todayThere’s never a better time than the present to get your financial house in order. Make it a belated New Year’s resolution. Whether your financial health is tip-top or you’ve been under the weather, it’s never too late to make improvements. Once you have financial well-being, you’ll never want to be without it