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No Rise in Social Security Benefits, again!

October 22, 2010

Henry Ford SayingFor the 2nd year in a row the Social Security beneficiaries (anyone receiving social security benefits) will not get a cost-of-living increase in 2011. Ouch! That is tough when the cost of bread, milk and rent continues to go up.  Old age is filled with indignities – thinning hair, achy joints, sales clerks who mumble and now this! If you retire with a pile of money this won’t affect your standard of living, but for the majority it will. 

Social Security accounts for 40% of the average income for retirees age 65 and older. More than a third of elderly Americans depend on Social Security for 90% of their income (this is according to Congress’  Joint Economic Committee).

By law, the Social Security  Administration ( http://www.ssa.gov/) can’t increase benefits unless consumer prices in the most recent third quarter have increased since the last cost-of-living adjustment. Social Security said there has been no increase from the third quarter of 2008.

  There are certain lessons for folks near the retirement age, aside from the obvious ones (stock pile cash, or just don’t retire):  you can protect yourself by waiting to file for benefits. You’re eligible for Social Security at 62, but the amount of your benefit will be permanently reduced. Postponing benefits will result in a higher monthly check and could lead to higher lifetime benefits, depending on how long you live. As you approach retirement try to put aside at least two years’ worth of expenses in a safe, liquid account. Once you retire, you can use the money to pay your bills ; having at least a two-year cushion can help weather a down period like the one we are having.

 Sadly, like the stock market, inflation doesn’t travel in a straight line. Let us at Gunwel Tax & Bookkeeping help you with your financial planning. Let us help create a budget that you can live on  thru fiscal storms like the one we are in now. Give us a call at 212-979-6830 and visit our website at www.gunwel.com for more information. See you soon!

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