In years past, it was often realistic for retirees to base the majority of their retirement income on Social Security benefits and traditional employer sponsored pension benefits.

Unfortunately, Social Security retirement benefits have gradually been reduced in real terms, and the age one needs to attain in order to qualify for retirement benefits has been increasing steadily. iven current retirement trends, these retirement benefits will continue to be more and more difficult for the government to fund.

Social Security was originally introduced in 1935 in the aftermath of the Great Depression. It was intended to provide a safety net of income to retired and disabled workers and their families. Social Security is a mandatory plan, requiring most wage earners to contribute a percentage of their yearly income to support the program. In return, they, their spouses and sometimes their dependents are eligible for retirement, disability and survivorship benefits.

Under the recently enacted Jobs and Growth Tax Relief Reconciliation Act of 2003, generating long term capital gains or acquiring dividend income could be two of your big opportunities to save on taxes. Be aware that the Act of 2003 created “sunset provisions”, however, meaning that the tax rates on both capital gains and dividends may go up again unless congress acts to extend the rates. The lower rates are currently only legislated through 2010.