Financial planning for the under 35 crowd – QNS.com

Financial planning for the under 35 crowd

Financial Planning is not just for people nearing retirement. In fact, it’s a good idea to begin planning for a comfortable and secure retirement when you’re young.

That’s why Social Security has a new financial planning tool especially for the 25 to 35 crowd. It is a special mailer with information about Social Security, savings, and other items of interest to young workers. If you are between the ages of 25 and 35 and you work and pay Social Security taxes, you will get this automatically with your next Social Security Statement.

Social Security is the foundation for a secure retirement, but was never intended to be your only source of income when you retire. While Social Security replaces about 40 percent of the average worker’s pre-retirement earnings, most financial advisors say that you will need 70 percent or more of pre-retirement earnings to live comfortably. Even with a pension, you will still need to save. If you will not have a private pension, you will need to save more — and start saving sooner. Today’s young workers can expect to spend 20, 30 or even more years in retirement, so saving is critical.

Want to start planning your future? There are some easy ways to do so. Look at your Social Security Statement, which you’ll receive in the mail about two to three months before your birthday, as well as the helpful two-page insert tailored for workers ages 25 to 35.

Pay close attention to the information provided, including tips on saving, getting your employer to help with matching contributions to retirement plans, and how much of a difference beginning to save early can make. There is even a graph showing the significant difference saving over time can make, even if it is just $25 or $50 a week.

The insert also includes helpful links to outside websites that can help you. For example, you can go to www.mymoney.gov for information on getting credit, paying for education, buying a home, creating a budget, starting a business as well as financial calculators and planning tools.

Or, visit www.federalreserve.gov for a worksheet that will help you establish a budget to meet your financial goals. These and other financial links on the insert will help you become the master of your own financial future.

Don’t forget that Social Security coverage is not just for retirement, but also for disability and survivors benefits in the event that you are unable to work, or you leave behind a family that depends on your income when you die. Read more about retirement, disability and survivors benefits at www.socialsecurity.gov.


Question: I lost my Social Security card and am afraid someone else could be using my number. Should I report it to Social Security?

Answer: If you think someone is using your number to work, call Social Security at 1-800-772-1213 (TTY 1-800-325-0778). However, reporting a lost or stolen card to Social Security will not prevent its misuse. That is why you should take further action. If you think someone is using your number, you will want to:

Contact the Federal Trade Commission online at www.ftc.gov/bcp/edu/microsites/idtheft or call 1-877-ID-THEFT (1-877-438-4338).

File an online complaint with the Internet Crime Complaint Center at www.ic3.gov.

Contact the IRS Identity Theft Hotline by calling 1-800-908-4490 Monday–Friday, 8 a.m. to 8 p.m.; and

Monitor your credit report.

Question: How much can I earn and still get Social Security retirement benefits?

Answer: Starting with the month you reach your full retirement age, you will get your full benefits with no limit on your earnings. Social Security uses the formulas below, based on your age, to determine how much your benefit may be reduced:

If you are under your full retirement age: when you start getting your Social Security payments, $1 in benefits will be deducted for each $2 you earn above the annual limit. For 2009, that limit is $14,160. The earliest age you can receive Social Security retirement benefits remains 62, even though the full retirement age is rising.

In the year, you reach your full retirement age: $1 in benefits will be deducted for each $3 you earn above a different limit, but only counting earnings before the month you reach full retirement age. For 2009, this limit is $37,680.

Keep in mind that although your benefits may be reduced due to earnings, you may receive a higher benefit later. After you reach full retirement age, we will recalculate your benefit amount to give you credit for any months in which you did not receive a benefit because of your earnings. In addition, as long as you continue to work and receive benefits, we will check your record every year to see whether the additional earnings will increase your monthly benefit. Find out your full retirement age at www.socialsecurity.gov/pubs/ageincrease.htm. Learn more by reading our publication, How Work Affects Your Benefits, at www.socialsecurity.gov/pubs/10069.html.

Question: Do I have to pay income tax on my Social Security benefits?

Answer: You will have to pay federal taxes on your benefits if you file an individual federal tax return and your total income is more than $25,000. If you file a joint return, you will have to pay taxes if you and your spouse have a total income that is more than $32,000. For more information, call the Internal Revenue Service (IRS) toll-free at 1-800-829-3676 (TTY 1-800-829-4059) and ask for IRS Publication 915, Social Security and Equivalent Railroad Retirement Benefits, available online at www.irs.gov/publications/p915/index.html.

EDITOR’S NOTE: This Social Security column will appear regularly, in the first issue of the month, in the Be Healthy Section.


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