If you felt it’s been tough financially for you or your parents the past few years, it was nothing compared to the drought following the Great Depression in 1934. More than half of all seniors back then lived in poverty and often went hungry. Our great grand parents had no annuities, little life insurance and few if any truly local financial experts to offer advice or help. In 1935, our Government came to their rescue and adopted social security. In the beginning, social security was a single lump sum payment instead of the lifetime monthly check we get today. The first ever recipient of social security worked a single day and paid in one nickel; retired the next day and got back $.17 cents!
What single parents need is a steady, reliable monthly check they cannot outlive. Parents typically invest to grow our money so that in the future it will generate a stream of income; either from interest or an annuity. Years ago, pensions filled this need for us provided by our employers. But few companies offer these expensive type benefit plans any longer.
But at least we still have Social Security as a resource; but it may become limited. Consider the first person to receive lifetime monthly payments from Social Security, was Ida Mae Fuller on 1/31/1940 for her 65th birthday. Ida Mae had paid into Social Security a total of $24.75 and her first check from Social Security was $22.54… and she lived until age 100. During her lifetime, she collected $22,888.92 on her $22 contribution; that was a pretty good annuity investment for her!
Even Elvis Presley had a social security account. Interestingly for parents, according to Social Security last year, “Elvis” dropped off the top ten most popular names list for babies, thus ending a reign that began in 1955.
Today social security is in a precarious position. Without changes immediately, it will not be able to pay out the benefits promised to retirees. It’s not a political problem but a math problem. In 1935 when Social Security began taking F.I.C.A. withholdings, the average life expectancy for a male was age 60 and age 64 for a female. Yet Social Security payments didn’t begin until age 65. Today life expectancies are nearer age 83, yet SS begins at age 67 at the very latest. In addition, the work force is changing. In the 1940’s there were 42 “workers” for each “retiree.” During Elvis’s generation of the 1950’s, the ratio of workers had dropped to 16-to-1 and as of 2010, there are less than 3 workers per retiree recipient.
Obviously our friends in Washington are going to be looking to increase F.I.C.A. income taxes (in case you’re wondering, FICA = Friends I Cannot Afford). Making the income tax laws work for your full advantage is very important to single parents. The benefits of your having an income tax deferred IRA or 401k or 403b are simply obvious and numerous. Don’t forget about old 401k or 403b plans you may have left behind at a previous place of work or employment. It’s simple and smart to do a “rollover” of your old 401k or 403b into a less expensive, low cost self directed IRA.
If you are uncertain about how and IRA or other retirement plans work, seek a local financial or money expert and get their advice. Tons of good financial planner and investment advisors are in Dallas, for example. Even better is the totally income tax free ROTH IRA. But special and unique rules apply to these investment gems.
Uncertainty creates unique opportunities for you to inform and educate yourself and family about tax advantaged solutions for retirement planning. Lifetime Monthly Income is more desired by single parents than wealth accumulation. Play it super safe by having an institution such as a bank or an insurance company guaranteeing your principle against loss. Not going backwards is the key between financial success and failure.
Get started today with you and your family’s journey to financial independence and retirement bliss. Get help local help and advice on the financial plan that is pitch perfect for you. Even Elvis would have been proud. Thank you, thank you very much….
