week 4 com156 - The Need for a Retirement Plan versus...

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The Need for a Retirement Plan versus Social Security It has been said that there is no need of a separate retirement plan to provide for the needs in retirement of the American working class. It is widely believed that Social Security will provide for all Americans needs in retirement. The truth of the matter many Americans don’t understand is that Social Security is failing. It is sliding on a downward slope of decay that will inevitably lead to shortfalls in funds, a sharp cutting of payment benefits and its ultimate demise by the year 2041. In order to meet their needs when they retire, all Americans are in need of a retirement plan to counter the short falls of Social Security. Because Social Security is a fixed income that only goes up marginally, Americans should disagree with relying completely on Social Security for their retirement needs. Retirement is something that should be planned for as carefully as we plan our careers, families and the course of our lives. Social Security is a fixed income that adjusts itself based upon legislation enacted in 1973 which provides for cost-of-living adjustments, also known as a COLA. Social Security and Supplemental Security Income (SSI) benefits keep pace with inflation by the use of COLAs. Cost of Living adjustments to Social Security increase payment benefits which are based on the consumer price index in the 3rd quarter of any given year. In the third quarter of 2009 and in 2010 the CPI did not change; since there was no increase to the CPI, there can be no increase to Social Security payments (Social Security Administration 2010). The same scenario plays out for every year despite the fact that the cost of living doesn’t stop going up. With no cost of living adjustments happening 2 years in a row (Social Security Administration 2010), it bespeaks the conditions of living on a fixed income in these times and for future. It is for this reason that all Americans should have a backup plan "Americans are beginning to recognize the level of savings needed for a comfortable retirement. Now it's critically important to take steps to improve the chances they'll have enough," said Greg Burrows, senior vice president, retirement & investor services at The Principal(R). "Research shows even simple actions, like calculating how much is needed for retirement, increases savings. Creating a plan and working with a financial advisor can also help get savers on realistic paths to a secure retirement." Copyright PR Newswire Association LLC Mar 15, 2011
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This note was uploaded on 05/06/2011 for the course COM 156 COM 156 taught by Professor Dr.jessicaguire during the Spring '11 term at University of Phoenix.

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week 4 com156 - The Need for a Retirement Plan versus...

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