Thursday, January 12, 2012

“Money is only a tool. It will take you wherever you wish, but it will not replace you as the driver.” – Ayn Rand

Ayn Rand’s comment is about the importance of being in control of your money and your finances, rather than your money being in control of your life. We make choices about our life every day. You probably don’t get in your car without a destination in mind. You know where you are going, and you know you may have choices on which route to take. For instance, the most direct route may take a little longer than utilizing a short cut. How does this translate to money?

I’ve written several times about the importance of planning. The next few blogs are going to address the different sources and strategies for long term savings to start building a secure investment strategy for your future.

Let’s start with one of the most overlooked sources, Social Security. If you have done nothing up to this point, the fact that you or your partner or spouse has a job means you have already started planning for your future. For every dollar you earn, your employer is obligated to contribute 6.2 cents into a fund for your future income. For 2011, your employer deducts 4.2 cents from your paycheck and sends it into the social security administration on your behalf (this is scheduled to go back to 6.2 cents after 2011).

You might be thinking, “What is this really worth to me and my spouse?” Saving pennies on the dollar may not seem like much money, but let’s look at how this translates into real dollars for your future.

Let’s say social security estimates that you are eligible for a $1,200 per month benefit in future dollars and you can start collecting this benefit at age 62. You would need a lump sum of over $225,000 today to create that amount of income (source: If you did not work outside the home you are entitled to ½ of this amount as a spousal benefit, which has a value of another $112,000. (These are approximates and should only be considered as an illustration based on the current interest rate, for educational purposes only). So a deduction of 6.2 cents by you and your employer can equal $1,800 a month for life!

If you are currently working, or you just got out of college and are ready to start your first job, you have to start a plan for your financial future. IMPORTANT POINT: Social Security is intended to SUPPLEMENT your own personal savings and investments. It was not intended to be the ONLY source.

The average social security benefit in 2012 is a bit over $1,200 per month (source:

In future blogs we will talk about what you can do to save for your future. We will look at short- cuts that can help you save more money, and we will explore what investment tools are available to help you reach your goals. In general, women are planners and successful investors. They are educated on the how- to’s and the whys. My goal is to help take you down the path of feeling confident enough to start the journey to your own personal destination. You can take the lead and be the driver whether you are married or divorced, single or widowed. Let’s get behind the wheel!

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Securities and Investment Advisory Services offered through NFP Securities, Inc., Member FINRA/SIPC. NFP Securities, Inc. is not affiliated with Fish & Associates.