5 Important Facts on Social Security

Saying that Social Security is complicated is like saying that the sun is hot. While it’s quite obvious that the entire Social Security system is extremely complicated, the fact is that as a consumer it’s vital that you know everything you can possibly know about how it works and what your benefits are in order to be able to take the most advantage of those benefits.

The fact is, even if you do know all of this information, it can still be difficult to make the best decisions when it comes to Social Security, your future and your family.

The following 5 Facts about Social Security, and how it affects you and millions of other Americans, are vitally important to know and know well. Although many assume that Social Security will be there when they need it, that isn’t exactly true.  Knowing the 5 Facts below will be extremely helpful when it comes time for you to make choices about your social security benefits. Enjoy.

Fact #1: Most elderly people in America rely on Social Security heavily

9 out of 10 people 65 years of age or older are already receiving Social Security benefits.  In fact, Social Security is the major source of income for most American seniors and  comprises nearly 40% of their income. Nearly half of all  elderly married couples  and almost ¾ of elderly single people receive at least 50% of their income in retirement from Social Security.

Fact #2: Social Security is a massive system

This year nearly 60 million Americans, including almost 40 million retirees, 9 million dependents and 11 million disabled workers, will receive Social Security benefits.

Fact #3: The American workforce is slowly shrinking

While this might not seem to be something to get alarmed about, the fact is that the demographics  on the American workforce are not good. Here’s why;  back in 1950 every Social Security recipient was supported by 16 workers. By 1960 that had fallen to five workers per Social Security recipient. It’s predicted that, by 2033, every retiree receiving Social Security benefits will be supported by only 2.1 workers.

Fact #4: The Social Security numbers don’t  add up

When it was started, a trust fund was established to cover any shortfalls between the Social Security benefits paid  to American workers and taxes paid  by them. It is predicted that, by 2033, this trust fund will be depleted completely. After that happens, the average Social Security recipient will only receive about 75% of their normal Social Security benefits.

Fact #5: There is one best way to increase your Social Security benefits

Any American consumer can start receiving their Social Security benefits at age 62  if they choose to do so. At age 70, it’s a must. Those eight years between age 62 and 70 are vitally important to keep in mind because every year that you wait to start getting your Social Security benefits your annual payouts increase by 8%. That means if you wait until age 70 instead of 62 to start getting your Social Security payments, you’ll receive 76% more money.

Put differently, if you can afford to delay getting your Social Security benefits until you reach the age of 70, and you end up living to be 82 years of age or older, you will get more Social Security income in your lifetime than if you had waited until full retirement age to start receiving your benefits.

Hopefully these 5 Facts about Social Security have opened your eyes to the realities that you face as a retiree who might be planning on relying on your Social Security benefits to support yourself in retirement. If you have any questions or comments about saving for retirement, please let us know and we will get back to you with answers and advice right away.

Global Banking is Here to Stay

Global banking isn’t a new concept, it’s just becoming a more popular one. A big part of wealth management is banking efficiently at a global level. Imagine the benefits of having several bank accounts, each in a different currency. Whether you want to hold currency in U.S. Dollars, Euro, GBP, or even Dinars, you can setup a bank account with the desired currency and hedge your overall portfolio risk. However, the benefits of having multi-currency accounts range further than just hedging your risks.

First, consider that you can initiate an international bank transfer without a fee. Simply take money out of one account and move into a different account with a different currency, and the only financial impact is the current days exchange rate. Like many other types of savings accounts, these international accounts offer time deposits as well. These types of deposit accounts provide a fixed return on your money, the only downside is that the money typically remains illiquid while earning said interest.

Second, consider that some countries offer more favorable tax laws than others. It goes without saying that holding funds in a country with lower tax rates will save you money. Even more so if you plan on one day retiring in that country. Or at the very least you may choose to vacation in that country from time to time and have access to immediate funds at your disposal.

Another huge benefit is that having money in local currency makes it easier to invest! For example, you may be attracted to real estate investments. It’s much easier making a down payment on real estate when you already have money within an account in the home country. Likewise, when you want to quickly move on a stock or IPO of a foreign stock exchange then you want to have funds that are readily available to invest.

The best part about having these types of current bank accounts is that you don’t sacrifice any of the amenities you have come to enjoy with your typical bank account. Online banking and bill pay is readily available, and often times without fees. With 24/7 banking available to you, you can keep track of your finances on the go.

With all of these benefits what are you waiting for? Open up a current account today and get started mitigating your risk by spreading your wealth over multiple financial currencies.

Have you Saved Enough Money these 4 Life Situations?

We said many times here on this blog that having an emergency savings account, saving for retirement and saving for practically anything that you might want in the future (a new car, home or a vacation) is vital to your financial health.

Unfortunately, not as many people take our advice as should and, when it comes to 4 specific life situations, not having enough money in savings can really put you in a financial hole.

Those 4 life situations are below and, once you read about them, you’ll realize just how important it is to have money set aside for when they come about. Enjoy.

Life Situation #1: College

Unless you’ve been living under a rock for the last few years, you’ve heard about the huge financial mess that student loans have caused for millions of Americans. Unfortunately, if you’re planning on going to college and you don’t have enough money set aside to pay for it, you’re going to have to take out student loans yourself.

If you have children that will be going to college (hopefully) someday, saving money for their college education is also vital so that you don’t put yourself in a financially sticky situation or leave your children with the unfortunate task of having to take out student loans themselves.

Having money put aside to pay for either your own college education or that of your children will allow you to pay for books, room and board, supplies and, if you save enough, possibly even your entire education, will save you from years of monthly loan payments and hundreds of thousands of dollars in interest.

Life Situation #2: Divorce

The average American simply isn’t ready to go from a 2 income household to a 1 income household and, with the average cost of divorce at $15,000, the financial results of going your separate ways can be devastating. If you don’t believe us, check out this statistic; of all senior women living in poverty, 37% are either divorced or separated.

Having money on hand if you’re going through a divorce can help you to pay for things like moving into a new home or apartment, legal fees and, more importantly, the ability to extract yourself from a dysfunctional (or abusive) relationship.

Life Situation #3: Changing Careers

It’s been a few decades since people went to work for one particular company and stayed there until they retired. In fact, the average person today has approximately 10 jobs during their lifetime.

Having enough money in savings to support yourself if you decide to change careers and need some time to get your second career going can enable you to go from a job that you don’t like (or isn’t financially rewarding) and move to something that you like a lot more and pays more as well.

Life Situation #4: Retirement

This is the “big one” and possibly the most important reason to put as much money aside during your working life as possible. The statistics on retirees who don’t have enough money to support themselves and retirement are absolutely staggering, and they’re backed up by the fact that only 14% of Americans feel “very confident” that they

Are you Ruining your Retirement?

Most financial experts will tell you that the steps you need to take to save for retirement are quite simple, but the discipline required to put them into action  is what trips most consumers up. Unfortunately, even though most people are aware of what to do, they are unsuccessful because they don’t take action. Many make excuses or convince themselves that saving for retirement simply isn’t necessary.

We disagree of course, and believe that saving for retirement is  vitally important. Below are some of the ways that consumers hold themselves back from reaching a secure retirement. If you see yourself in any of these, it’s possibly time to change your way of thinking. Enjoy.

1) You believe that you’re “too young” to start saving for retirement.  If this is you, here’s a fact; as a young person, you’re in the best position you will ever be in to accumulate a significant sum of retirement money. The reason is compound interest, one of the most powerful wealth building tools known to man. With time on your side you can truly build wealth and, by starting as early as possible, that wealth will grow substantially over the years.

2) You want everything that everyone else has. Many people look around and believe that their friends and neighbors are living the “American dream”. They drive fancy new cars, live in huge houses and always have the latest and greatest smartphones, etc. If you look more closely however you’ll realize that this isn’t actually true. As a matter of fact, many of the people with the nicest cars and homes also have the most stress and anxiety because they’re actually living beyond their means. We’re not saying that you need to sacrifice and live like a pauper, but simply that wasting money on a gigantic house that you don’t use or  upgrading your electronic devices every time a new one is released wastes an awful lot of money that could be going towards your retirement goals.

3) You keep waiting until the time to save for retirement is “perfect”. Here’s an example of what we mean. Robert  graduates from college and starts his first new job but decides that, rather than enrolling in the company’s 401(k) plan, he’s going to spend his money on replacing his old, ratty college furniture, getting a new car and replacing his wardrobe. While these things are all good and well, the relatively small amount of money that Robert could be putting in his 401(k)  really won’t keep him from being able to achieve his short-term goals. Plus, if his company has a 401(k) matching plan, that’s money left “on the table” that he won’t ever get back.

4)You believe that saving is a “sacrifice”. Millions of people in America are under the impression that saving money means sacrificing things that they want. It’s flawed reasoning to be sure because, when you save for retirement, you’re actually saving for the freedom to be able to do and enjoy things in the future. Again, living like a pauper isn’t necessary. You don’t have to save every single penny, just some of those pennies. Compound interest will take care of the rest.

5) You don’t put much thought into nurturing relationships. This last bit is more about the type of life you will lead once you reach retirement more than the money you put aside for it. Relationships with family and friends are what make life enjoyable and, if you’ve put a lot of effort into saving for retirement but little into nurturing the relationships that will bring you joy when you actually do retire, you are going to be very wealthy but lonely person.

If you’ve seen yourself in any of these 5 examples, it might be time to change your thinking about what saving for retirement really means. If you have questions or comments please let us know and we’ll get back to you with answers and advice.