The Committee on Economic Security was established by President Roosevelt in June, 1934 to develop a comprehensive social insurance system covering all major personal economic hazards with a special emphasis on unemployment and old age insurance. A compromise Social Security Bill was signed by the President on August 14, 1935.
More than 79 years later, some baby boomers may not be able to count Social Security in their retirement plans. Some reasons may include:
1. There’s not enough any money left in Social Security’s trust fund.
Originally the plan was for employed individuals to voluntarily put money into insurance coverage that would be put into a government managed interest bearing Trust Fund that may be used only for paying retirement benefits.
Unfortunately during President Lyndon Johnson’s administration, the funds were made available for use in other government programs. For years Social Security has taken in more money than they have paid out; but instead of saving this surplus, the government spent the funds and replaced it with the “IOU”, a special issue government bond to be paid back starting in 2017. No one knows at this stage just where the money will come from.
2. Social Security is subject to double taxation.
The intention of the plan was that money paid into the system be tax deductible for income tax purposes. During the Clinton Administration, Social Security benefits became taxable. Currently, you pay income tax on the money that is deducted from your paycheck that goes into Social Security. Then when you receive it, you may be taxed on all or part of your benefits if you have other income besides Social Security. This results in being taxed twice on the same money.
3. Social Security isn’t enough to live on.
Despite the fact that you work hard your whole life and pay into Social Security, there is a slim chance you will have enough to live comfortably into your retirement. You may work and contribute to Social Security until you are 70 and only receive $566 per month. Can you live on that?
4. High Social Security taxes take our retirement savings.
Social Security and Medicare taxes are 15.3% of your earned income. With high inflation, few of us can also afford to put away anything extra for our retirement.
5. How secure is Social Security?
As we have seen in the past, the laws and rules that govern Social Security change in accordance with who is in office at the time. How secure is it really?
So, how do we solve our pending Social Security dilemma?
Start a Business that may continue to provide for you even after you retire.
Interesting concept, isn’t it?
Is this a new idea to consider?
Smarter baby boomers have been taking this into consideration during the past decade. In Year 2000, there were fewer than 10% of us self-employed, but in 2009, self-employed baby boomers have grown to more than 26%.
Owning a business is a great alternative to current popular retirement plans. Being self-employed provides the choice between paying into Social Security and investing in yourself. In fact, in many cases, if you stop paying into Social Security in your 50’s, you will still receive about the same benefits as you would if you paid into it until you were 70.
Start your own home-based business
A very popular way to achieve this is to turn an activity or interest into a home-based business. There are many ways that you can benefit when you own a profitable business.
With your own home-based business, you can then deduct from your taxes some of the tools and supplies that are utilized in your business. The room(s) you use at your residence can be deducted by claiming a portion of your rent or mortgage with its interest and taxes and a portion of your utilities, insurance plan, and even many repairs to your home. Remember, the tax savings is net money that enables it to be added directly to the bottom line of your retirement income.
If you own your business, when you retire you can either have a relative take over the business, hire someone to run it for you, or you may sell it for retirement income. This way you can receive income until you die and then you could even will it to your heirs.
If you choose to represent or sell your products online, some of your online costs are tax deductible, which may include your site, marketing expenses and computer costs may be tax deductible. By making these things tax deductible you may be able to limit everything you pay into Social Security and invest it back into your own business, retirement or savings plans of YOUR choice.
Do you want to travel in your retirement?
As you visit your children and grandchildren or even take a deserved vacation, you can make the trip deductible by attending a trade show or investigating new ideas, products or services. Take the travel idea to an even higher level and become a home-based travel agent. Yes, you can save up to 70% on travel and write it off your own taxes too.
• Can we still expect to receive a full retirement?
• Are we able to still depend on just our own investments, savings and social security?
• Will we have to work in our retirement to enjoy a good quality of life?
So give some thought to these questions:
So what does retirement mean to enterprising baby boomers who have successfully woven passion into what they do as small business owners? Do you plan on retiring when you reach 65? Do you even want to?
Article contributed by BabyBoomer-Magazine.com