Succession – How Does Social Security Factor In?
December 8, 2008
Social Security was designed as a safety net. But what kind of safety net is it? For those of us who are Boomers, it’s a politically secure safety net, but one that only provides some of what we will most likely need when be begin to slow down. Some underlying facts about Social Security can be found at Money Central on MSN.com, like what percentage of current earnings Social Security replaces. It’s revealing.
What this article doesn’t say is that Money Managers often grossly overestimate just how much we’ll need in retirement (depending, of course, on healthcare needs). People are retiring comfortably on much less than the 80-90% recommended amount. (I’ve suggested reading Fred Brock’s excellent “Retire on Less Than You Think” book from the New York Times. It tells you the numer can be much less than that, often as little as 50%, depending upon lifestyle.)
What it also doesn’t give you is the value of the Social Security payment you will receive in terms of how much savings you would have to have if Social Security weren’t there in the first place. Each $1,000/month in Social Security benefit would, if payable from savings/retirement funds, have to be supported by an investment amount of about $240,000 (at 5% interest). That’s truly something to think about.
John Reddish‘s expertise is helping entrepreneurs and top executives who want to master growth, transition and succession, get results faster, less painfully and in ways that work for them. John is a member of the National Speakers Assn. For more information: www.getresults.com. For succession information, go to: www.thesuccessionplanner.com. Or call 800.726.7985 in the US, 01.610.388.9335 internationally, or use the contact form to e-mail me.
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