Millions of seniors today receive social insurance, and many rely on these benefits for the bulk of their income. If you plan to do the same thing while you're retired, chances are you're not saving yourself much right now. However, before deciding to choose social security as your sole source of income, you should know the following: These benefits were never intended to help retirees on their own. In fact, the average recipient today only collects $ 1,461, or $ 17,532 per year. If that does not sound like much money for you (which it should not be) then consider this as your wake up call to save yourself.
The Role of Social Security in Your Retirement
The purpose of Social Security is to increase your retirement income and is not your only source. If you are an average earner, you can expect your benefits to be about 40% of your retirement income to retire. However, most seniors need almost twice that amount to live comfortably, and when you think about the things retirees spend money on, it makes sense.
Just as you need a roof over your head, transport, food, clothing, and healthcare during your working years, you need all of these Things also retired. The same applies to utilities, cables, communications (think of your mobile phone and internet service) and even leisure. Therefore, it is stupid to think that you can live on 40% of your previous income and maintain a standard of living that is familiar today. And even if you're willing to cut some spending, you're probably very likely to only have to live from social security once – changes that you're probably not satisfied with.
A better bet, so it's time to work on your own savings and use Social Security as an additional source of income. Currently, you can contribute up to $ 19,000 per year for an amount of 401 (k) if you are under 50 years old, or $ 25,000 per year if you are 50 years or older. If you do not have 401 (k) through work, an IRA is your next best bet. You can spend up to $ 6,000 a year if you're under 50, or $ 7,000 a year if you're 50 or older
If you're not used to saving money at all, you may not be able to get one account types, at least not initially. However, if you save a modest amount of money over time, you can build a rich future fortune. A typical example: if you save a month for 35 years for 35 years, you will receive about $ 500,000 for retirement if you invest your savings with an average annual return of 7% (which is more than possible with a long investment window). Make $ 500 a month and you will be sitting at nearly $ 830,000, with all other things being equal.
Do not rely solely on social security
Using social insurance without your own savings is a great way to prepare for a financially demanding retirement. In other words, if you can approach your golden years without much savings and can not do much to catch up, you can at least be wise to increase your benefits. This means that you have to wait at least until your full retirement age (66, 67, or somewhere in between) to get social insurance, or, ideally, to delay benefits beyond the full retirement age by 8% per annum increase (what you can) to 70 years of age). You should also check your earnings to make sure the Social Security Administration has the right information for you. The last thing you want is a lower retirement performance because there is nothing but a typo.