We're told to save for retirement independently so as not to struggle in our golden years, but US Government Accountability Office data show that nearly half of workers aged 55 or over are without personal benefits Committed to this milestone to show savings for. Part of this could affect poor money management, but over-reliance on social security could also share the blame.
Many workers mistakenly believe that social insurance is sufficient to cover their retirement accounts. But that's a misunderstanding that could cause millions of Americans to spend cash in their golden years.
You Can not Go On Social Security Alone
Social security is not meant to support seniors alone. These benefits replace around 40% of the average earner who retires. For higher earners, an even lower percentage will be replaced. In the meantime, most seniors need about 80% of their current income to live comfortably. Those with high goals who require extended travel and nightlife may need significantly more. Either way, relying on social security is a really bad idea, and this could lead to you being left out after collecting a paycheck.
If you're still not convinced, consider the following: The average Social Security recipient is currently earning $ 17,552 in benefits. This is barely above the poverty line and certainly not enough to support a comfortable retirement. So, if you want to enjoy your golden years, you should consider the following: At best, social security pays only half of your retirement. The rest of your income must come from you.
Increase your savings
If you have neglected your savings so far, you should call this a wake-up call, according to which social insurance alone in retirement does not mind. Rather, you have to save enough to enjoy your golden years. The good news is that you have the opportunity to make savings, even if you are on the older side and your retirement is not far away.
Workers who are 50 years or older can do so Currently, they can make up to $ 7,000 a year for an IRA and $ 25,000 a year for $ 401k. If you are not in the habit of saving anything now, you probably can not snap your fingers and pull out a 401 (k) overnight. However, what you can do can begin to save something and then increase your savings rate if you make lifestyle changes that will enable you.
That's right: you'll have to seriously consider reducing costs and saving the difference if you want to achieve a secure retirement. But suppose that if you do not try to save today, you will probably have to save a lot of money in retirement – things like cable television and other luxuries you are currently enjoying.
What will be the limitation of your spending and the differentiation of the bank level for your nest? Imagine you could provide $ 500 a month for the next 12 years. If you invest this money with an average annual return of 7% (which is more than possible when recharging stocks), you'll expect $ 107,000. Well, frankly, that's not a lot of money to withdraw. But it is a beginning . Plus, if you can provide $ 1,000 a month over the next 12 years, you'll need to accumulate $ 215,000 if you assume the same return of 7%.
At the same time, if you are an older worker without saving a lot of money you may have come up with the idea to work in retirement during retirement. A part-time job that raises your income by about $ 300 a week can compensate for a minimum or nonexistent retirement plan. And you do not necessarily have to do something that you hate – you can turn a hobby you like into an income-generating opportunity.
While social security is a key source of income for many seniors today, it can not pay your retirement alone. If you are an average earner, you can expect to provide about half of your retirement income, but not more. The balance must therefore come from you in some form.