The 2014 American College RICP® Retirement Income Literacy Survey was recently released and its stated goal was to determine whether retirees and pre-retirees have the knowledge they need to successfully plan for a financially secure retirement. And while there is quite a lot of useful and enlightening information in the report, which I will comment on shortly, there is one qualifier in the overview which I find troubling.
That qualifier is “With limited or no ability to earn additional money through work, this group must know how much they need to accumulate by the time they retire and know how to manage their money during retirement.”
Now what is troubling to me about this qualifier is the dated notion that people reach Social Security age of retirement and they are done earning money. This may not be what is actually happening in the marketplace.
First the age for qualifying for full Social Security retirement has moved past the traditional age 65, pushing out past age 66 depending on your birth year, with the first 100 percent of Social Security being paid out at age 66, with the spouse qualifying for 50 percent, so if the male is turning 66 and his wife is 62 they would qualify for these benefits.
After full retirement qualification for Social Security you can earn as much as you want to without losing your Social Security, if this income falls under provisional income you may find some of your clients social security being taxed, up to 85 percent depending on where that additional income is coming from, see my previous article on this.
As reported in a US News and World Report article “The proportion of people age 65 and older in the workforce grew to 16.1 percent by 2010, up from 12.1 percent in 1990, according to a recent Census Bureau report. And the percentage of people between ages 65 and 69 who are working grew 9 percentage points to 30.8 percent in 2010.”
Second many households today have two incomes and in this Census Bureau report 54 percent of couples are working in a household. So to approach a prospect as if “his” or “her” retirement is the primary concern for the family may not be the most dynamic method to ensure their retirement years are manageable and meet their lifecycle issues.