Social Security is a long-standing American program, but recently it has begun to show signs of strain; it was recently announced that 2010 is the first year Social Security will run at a deficit because it will pay out nearly $30 billion more than it takes in through taxes.
Anyone currently receiving Social Security benefits and those retirement savers who hope to receive some benefits in the future should have a contingency plan in place to compensate for a potential drop in benefits in order to protect their retirement future.
If you are near retirement or in retirement, the impact on your Social Security benefits will most likely be small, but you do need to remember it isn’t intended to be your number one source of retirement income, it is meant as a supplement to what you’ve saved on your own.
Your efforts should be put towards protecting your wealth with strategies such as reducing your risks, creating an income plan and planning for the unexpected.
If you have between 5 and 27 years until retirement, your Social Security benefits may be impacted, but you can still take advantage of catch-up contributions on your retirement savings plans (if you’re 50 years or older), compounding interest in accounts where you can do so, and laddering investments to maximize your savings strategy.
Laddering, for example, works well with an income plan because the process of laddering helps you plan for a steady income stream for retirement. ‘Laddering? long-term, medium-term and short-term investments so they mature at different times can help you have a good income stream in retirement as well as decrease your income taxes, if done correctly.
Putting money in tax deferred accounts can reduce your annual liabilities as you do not need to pay taxes on money not yet needed for living expenses. Your risks are spread out by using these different investments as well, which can help you further protect your assets.
Retirement is a one-time deal, and with Social Security being an unreliable source of income, don’t count on it, but rather take it as an added bonus if you do benefit from it in the future. You don’t get a do-over when it comes to retirement, so be sure save enough before you get there and work hard to maximize and protect your retirement savings.
David Boike owns Retirement Resources tax, mortgage, and financial consulting practice in Clarkston with his sons, D.J. Boike and Jake Boike. Call 877-732-5751.

It’s been one year since the American economy took a turn for the worse. Ever since, area residents have been experiencing financial difficulties, especially with retirement saving.
The following are common concerns retirement savers have today as well as tips on how to resolve these worries to get back on track toward your retirement savings goals.
Concern #1 ? Recouping Losses
Retirement accounts are down, but that’s not a reason to give up on your retirement goals. There are ways to turn your losses around and still retire on time.
Changing your strategy to keep up with the changing market is one way to begin to recoup losses. We’ve experienced some major shifts in our economy this last year. Be sure your portfolio has shifted to reflect. However, be sure to keep your time until retirement and risk tolerance in mind. If you don’t have a lot of time left to retirement, consider investments that offer low risk growth such as CDs, fixed annuities and municipal bonds.
Concern #2 ? Outliving Savings
Unfortunately all too often boomers and retirees find their retirement accounts come up short and they are forced to postpone or delay retirement.
You need to know how much you are going to require in retirement to prevent outliving your savings. First determine how long you’ll be retired. To do this, take the age at which you plan to retire and then estimate your life expectancy. To get this figure you can use a life expectancy calculator that takes into account your health history, family health history and/or lifestyle habits.
Once you know how many years you’ll be retired, estimate what you’ll need each year while in retirement. Typically, you need 70 percent of your yearly income, plus 3 percent for inflation each year. This is a base estimate that will give you a rough guess as to how much you’ll need to have saved to live comfortably in retirement.
You also need to know where your monthly retirement income will come from and keep track of all possible sources of income. Common retirement income sources include Social Security, pensions and retirement savings accounts.
Concern #3 ? Minimizing Taxes
Taxes are a fact of life and can nibble away at a nest egg.
One easy way to reduce taxes is to create a plan for how and when you’re going to withdraw savings from your accounts in retirement. Having a withdrawal plan in place can save you money in income taxes and even fees.
Not all accounts offer the same tax benefits so you may want to consider changing the type of your retirement savings plan depending on when you’re going to need these retirement funds. If you’re worried about taxes going up in the future, consider a Roth IRA. A Roth IRA offers tax-free growth on the principal, no taxes or fees upon withdrawal (taxes are paid at the time of contribution) and there is not a set age that you must begin withdrawing money. Income restrictions for Roth conversions are being lifted in 2010 so anyone can switch to a Roth IRA.
Take hold of your financial future by making subtle changes today!
David Boike owns Retirement Resources tax, mortgage, and financial consulting practice in Clarkston with his sons, D.J. Boike and Jake Boike. Call 877-732-5751.