قالب وردپرس درنا توس
Home / Business / Your most important source of retirement income should not be this – the colorful fool

Your most important source of retirement income should not be this – the colorful fool



Retiring means losing the paycheck once collected and having to replace it with other sources of income. Ideally, this other income will be at least partially in the form of an IRA, 401 (k), a pension or a combination thereof. You may even opt for a retired part-time job. However, if you sit down to determine how to pay the bills, you should not rely too much on one source of revenue: social security. 19659003] Many people make the mistake of neglecting their savings during their working years, and think that they can only live on social security when the pension arrives. However, this could lead to a world of financial burdens.

 ] Professionally dressed senior man reading a document

Source: Getty Images.

Contrary to your assumption, social security should only replace about 40% of a worker's typical early retirement income. However, most seniors need about twice as much to live comfortably and pay for luxury that goes beyond the bare necessities of food, health and housing. If you are willing to lower the cost of living once you stop working, you may have to spend less than 80% of your previous salary on a monthly basis. But can you really handle just 40%? Probably not.

That's just one reason why retired social security should not be your main source of income. Second, there is a funding gap for the program, which, if left unchecked, may lead to a general reduction in future benefits. Currently, this reduction is estimated at 20%, but it may change for better or worse over time. The point is that we do not know exactly where social security should go. So if you rely too much on these services, it can hurt you later.

Building Savings

If you expect a generous pension, then if you need to save aggressively in later years, this may not be true for you. However, failing that, it is imperative that you work to build a nest egg so that you do not rely too much on social security.

Fortunately, if you have a few years left to build wealth, you have a solid chance, especially if you invest your savings wisely. This usually means that you have to recharge your stock, assuming you are at least 10 years before you retire.

Imagine you are in your early 40's and want to retire 25 years later. This is what your savings balance might look like, depending on how much cash you can collect by then:

Monthly Savings

Final Balance after 25 years (assuming an average of 7%) Annual Return)

$ 400 [19659013] $ 304,000

$ 500

$ 379,000

$ 600

$ 700

$ 800 [19659015[76524000US$[531000Theabove-mentionedvalueactuallyamountstoafewpercentagepointsbelowtheaverageofthestockmarketmakingitareasonableassumptionfora25-yearinvestmentwindow[19659005] If you are retiring and do not have much money in an IRA or 401 (k) You still have options that you do not have to rely on too much on social security. You can extend your career by a few years to increase your savings, sell some assets (such as your own home), generate retirement income, or commit to part-time employment after finishing your main career.

Just do not sit back. Collect your social security benefits and try to get through. If you use those benefits as the primary source of your retirement income, you're likely to be in trouble and miserable at some point in your life when you make a better living.


Source link