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Retirement resource:A column by David Boike

Make a plan for no Social Security

July 14, 2010 - 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.

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