Why the Social Security money you earned for retirement might not be guaranteed

Why the Social Security money you earned for retirement might not be guaranteed


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When you picture retirement, you may be dreaming about long-awaited vacations, endless hours on the golf course, and extra time to spend with family and friends. But if you're banking on Social Security to see you through those freedom-filled years, you may be in for an unpleasant surprise.

Before the pandemic, many Americans were skeptical about Social Security. But now 70% of them believe their benefits will be cut or eliminated by the time they retire, according to MarketWatch.

It's an easy thing to worry about, given that the Social Security Administration itself estimates that the system's fund reserves will become depleted by 2034. After that, continuing tax income is expected to pay 76% of scheduled benefits. While Social Security won't be eliminated entirely, it's safe to say that you shouldn't rely on it as your sole source of income.

The truth is, there are many things that could be affecting the amount of money you'll have in retirement. Your current income, the kind of lifestyle you hope to lead, and your investment decisions are some of them. Luckily, there are simple steps you can take today that can make a huge financial impact.

Even if you think you've saved enough, overlooking this one thing could be costing you tens or hundreds of thousands of dollars. Here's what you should know if you want to have plenty of money saved up by the time you retire.

Case Study: Tax preparation vs. tax planning

If you hope to have plenty of money on hand in retirement, simply accounting for taxes won't be enough. You'll need to learn how to optimize your finances. To illustrate the cost of not planning effectively for the future, consider the following case study:

Craig and Laurie are a recently retired married couple. Craig spent his entire career as a grocery store manager while Laurie worked 20 years as a registered nurse. Their combined retirement income (including savings, pensions, IRAs, and 401(k)s) totaled $1.5 million.

While that may sound like an impressive chunk of cash, here's the catch: Without strategic tax planning, Craig and Laurie will have to pay $940,120 in taxes. However, with the help of a professional financial advisor, they could pay just $299,661 in taxes.

That's a difference of $640,459 in tax savings!

Unfortunately, too many people wind up in the first scenario. Why? Because they do tax preparation instead of tax planning. Tax preparation focuses on complying with state and federal tax laws, but tax planning takes things a step further.

According to NerdWallet, "Tax planning is the analysis and arrangement of a person's financial situation in order to maximize tax breaks and minimize tax liabilities in a legal and efficient manner."

Simply put: Tax planning is a smart idea if you want to save a lot of money in the long run.

Why the Social Security money you earned for retirement might not be guaranteed
Photo: Shutterstock

How you can save a fortune in retirement

Like most people their age, Craig and Laurie were worried about running out of money during retirement. When a friend recommended B.O.S.S. Retirement Solutions to help them manage their retirement income and taxes, they were hopeful — but a little doubtful about the difference it would make. They thought they might be able to save a few thousand dollars if they were lucky.

Little did they know that they would end up saving much more than that.

By providing forward-looking strategies that helped them put their money in the right accounts, B.O.S.S. Retirement Solutions saved them tens of thousands of dollars.

Now, Craig and Laurie are able to rest a little easier in retirement knowing their financial situation is secure. Working with professional financial advisors not only saved them money it also saved them years of worry and concern.

Financial peace of mind for the future

It's never too late (or too early) to start planning for your retirement. By taking advantage of some simple tax planning strategies now, you could save yourself tens of thousands—if not hundreds of thousands of dollars in retirement.

If you have $200k or more saved for retirement and want to learn exactly how much money you could see in taxes in retirement, schedule a free Retirement Tax Analysis with one of our fiduciary advisors by clicking here or calling 801-216-3683.

Ryan Thacker and Tyson Thacker are the Founders of B.O.S.S. Retirement Solutions with 6 offices throughout greater Salt Lake City. They are three-time winners of Utah's Best of State Award.

Advisory services offered through B.O.S.S. Retirement Advisors, an SEC Registered Investment Advisory firm. Insurance products and services offered through B.O.S.S. Retirement Solutions. The information contained in this material is given for informational purposes only, and no statement contained herein shall constitute tax, legal or investment advice. The information is not intended to be used as the sole basis for financial decisions, nor should it be construed as advice designed to meet the particular needs of an individual's situation. You should seek advice on legal and tax questions from an independent attorney or tax advisor. Our firm is not affiliated with the U.S. government or any governmental agency.

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Ryan Thacker and Tyson Thacker for B.O.S.S. Retirement Solutions


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