According to recent Gallup polling, 47% of workers don’t expect to receive a Social Security benefit when they retire. In fact, a highly comprehensive 2021 study by the Social Security Administration (SSA.gov) that covers 50 years of workers’ expectations indicates Americans have long been doubtful that Social Security can remain solvent.
Will Social Security’s Coffers Run Dry? The Short Answer: No
In recent years, the Social Security Board Of Trustees announced that the program’s trust funds are expected to run out of cash reserves in 2035. Without cash reserves, Social Security will only be able to use the taxes it collects to pay benefits for current retirees. In the worst-case scenario, if this comes to pass, Social Security beneficiaries will only be able to receive approximately 83% of their full retirement benefit. However, there’s no need to panic – there are a number of ways Congress can bolster the program.
Should You Play It Safe & File Early For Benefits? The Short Answer: No
Filing early will reduce your benefit by 30% for the rest of your life. When you do the math, that’s a considerable loss of money that you could’ve counted on in retirement. Instead, why not create another source of permanent, lifetime income in addition to your FERS pension (annuity) and Social Security?
“Then again, there is a way to have the best of both worlds: use your TSP to purchase a Fixed Indexed Annuity (FIA).”
The Secret Of Financial Security In Retirement: Guaranteed Income
As a FERS participant, you can count on two sources of guaranteed lifetime income that are not affected by stock market volatility. Of course, you can also use funds that you’ve socked away in your Thrift Savings Plan (TSP) but without a well-diversified mix, you may be vulnerable to sudden downturns in the market. Then again, there is a way to have the best of both worlds: use your TSP to purchase a Fixed Indexed Annuity (FIA).
Advantages Of A Fixed Indexed Annuity (FIA)
An FIA offers a minimum guaranteed interest rate combined with an interest rate linked to the performance of an outside index such as the S&P 500. It also guarantees a minimum return and guaranteed income for life. If your index performs well, the value of your annuity increases. Since an FIA is an insurance product, you’ll pay a premium. However, if there’s a stock market downturn, you don’t lose money because fixed indexed annuities have no underlying investments.
An FIA may be right for you if you can’t tolerate the risk of a volatile stock and you prefer the peace of mind of having another guaranteed stream of lifetime retirement income. To learn more, connect with an FRC® trained advisor.
