The 3 Numbers Driving Financial Planning and Why It’s Broken!
We meet with a lot of people and over the course of the last 5 years the three numbers that seemingly drive every conversation around retiring and the greener pasture so many Americans are striving for are…drum roll please?
- 59.5
- 65
- 66
Why 59.5? Because that is when American’s can access their IRA or 401K dollars they have been saving for over two to three decades without penalty. The withdrawals still count as income from a taxation standpoint, but the penalty is removed.
65 is another one as 10,000 Americans a day turn 65 and enroll in Medicare. Health insurance premiums under Obamacare have skyrocketed over the last five years and many are worried what is to come this fall when the open enrollment begins. According to US News, the state of Iowa is warning that if nothing is done, insurance companies may not offer individual plans on the exchange because it is so unprofitable for them.
Finally, 66 is magical for most people because that is when they hit their F.R.A. or (Full Retirement Age) which gives them 100% of their social security benefit. Currently, the full benefit age is 66 for people born in 1943-1954, and it will gradually rise to 67 for those born in 1960 or later.
So, what is wrong with understanding and maximizing these ages and benefits? We aren’t saying that it doesn’t make sense to maximize the benefits you have honestly paid into for over the last 4-5 decades since you joined the work-force, but for many Americans who have worked so hard and enjoyed the fruits of their labor, it seems scary to rely on the government for so much in retirement when our country is technically so broke.
What if the government starts taxing 100% of your social security benefit? The federal government is taking in record tax income more so than any time in history, and yet they continue to run at a massive annual deficit. According to CNS News, this year’s deficit amidst record tax revenues is $88,426,000,000 for the month. What if they lower the income thresholds on provisional income to include more of your social security taxable? What if they raise your Medicare premiums to eat up more of your social security benefit? What if they means-test based on your other income and reduce your social security benefit? All of these are possible scenarios as more and more seniors access the benefits they have been promised.
So many Americans are trying to cross the finish line of retirement with the least amount of responsibility and let their last step in the work force carry them home. It seems to us to truly retire you should be able to do it without the federal government changing the rules which could jeopardize your lifestyle, cash-flow and legacy. At Uncommon Wealth Partners we believe it is going to take uncommon principles and true diversification and tax strategies to enjoy retirement and if, not when, the government changes the rules you are in a position of strength not a position of having your hands out.
- Are you in a position to retire without government programs?
- Do you want uncommon results?
Then you have to do uncommon things. If you want to know more about the three numbers we are helping people track to have a truly time free retirement, please subscribe here or contact us here.