Many believe that once they retire, they will manage to live on income derived from Social Security. But will it really happen?
If you are confident that you can manage on Social Security alone, consider this: In 2021, the average senior will receive a $ 1,543 per month benefit, with 1.3% factoring in cost-of-living adjustments (COLA). new Year. Before COLA, the average monthly profit sits at just $ 1,523.
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This is just an average. It may be that you are entitled to higher social security benefits than a normal senior based on your earnings history. If you are an average wage earner who hopes to retire on Social Security alone, you want to rethink that plan. Otherwise, you risk ending the cash-crisis later in life.
Why social security just won’t cut it
Social Security can provide a large portion of income for you as a senior, but it should not be your only source. If you are not convinced, ask yourself: Can you really afford to stay at $ 1,543 a month, or $ 18,516 a year? If not, you will need to secure additional income streams to avoid money problems during retirement.
You have several options. You can, for example, plan to work part time. Many seniors do this for financial benefits as well as social ones. A job you love will occupy you for some time without the need to spend money.
3 revisions You can reach the age of 50
If you are a homeowner, you can supplement your Social Security benefits with rental income. If you have a finished garage or basement and your local zoning laws allow for this, you can rent that part of your home and use the money to cover living expenses.
Although both these ideas can work, they are not guaranteed. You may struggle to find a part-time job that works for you, and you may face health or mobility issues that make it difficult to work. Also, like zoning restrictions, you may face obstacles when trying to rent your home.
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If you are eager to secure income outside of Social Security for retirement, your best bet may be to save for that period in a dedicated account, like an IRA or 401 (k). That way, you will have extra money, without you having to rely on your ability to work or secure a tenant.
Many people struggle to make room in their budgets for retirement planning contributions. If you manage to pay only $ 300 per month over 30 years, if the investment in your account generates an average annual 7% return (which is reasonable for a stock-heavy investment mix), you deposit $ 340,000. will do. Do it $ 400 per month, and you will have $ 453,000 in your name.
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Lovely as it would be to provide sufficient income for social security, for most people, this is simply not the case. The sooner you realize this, the sooner you can start saving enough money to enjoy retirement.