قالب وردپرس درنا توس
Home / Business / Will an overreliance on social security kill your pension? – The Motley Fool

Will an overreliance on social security kill your pension? – The Motley Fool



Millions of seniors depend on social security to pay the bills in retirement – but many do so in an unhealthy manner. An estimated 21% of elderly married couples and 44% of older singles expect their benefits to provide 90% or more of their income. And if you are planning to follow a similar pattern, let this be a warning: To rely too much on social security may mean you are convicted of a poverty life – or near poverty – in retirement. And you deserve it better.

You can't live on social security alone

Many working adults assume that when they retire, Social Security will do a solid job of billing. Not so. These benefits are only made to replace about 40% of the average employee's early retirement, but most seniors need to live almost twice as much as possible when their careers come to an end.

<img alt = "Older man reads book outdoors. [1
9659005] IMAGE SOURCE: GETTY IMAGES.

The reason? Many of your current expenses are likely to be the same when you go on retirement, if not, go up. In fact, 46% of households will increase spending more money, not less during the first two years of retirement, according to data released a few years ago from the Research Institute for Employee Benefit. by households spending more money during their first six years after their career. Social security as such cannot clearly provide enough income to buy the older the respectable lifestyle they seek when they stop working. [19659006] Here's why it's particularly problematic: A large 42% of today's workers do not save for retirement, which means they risk turning to social security benefits as their only source of income when they are older. consider it tea a wake up call to start contributing to an IRA or 401 (k). Otherwise, you might end up being miserable in retirement, not to mention you.

Save now, stress less later

If you are not convinced that the Social Security scheme will be short when you cover your pension costs, you should consider this: The average recipient currently receives $ 17,532 in annual income. If it sounds like enough money to live on, then you are free to stop reading. Otherwise, you start putting some money each month, even if it's only $ 25 or $ 50 to begin with. As your income increases, you can allocate your travel to long-term savings and ramp in that way.

At the same time, look at your monthly expenses and find ways to cut. It can mean you reduce your living space, get rid of your car if the bus is much cheaper (as it probably is), and stop eating out as often as you do. Another option? Look at a side cast to drum up extra money for retirement savings. Socking away even a few hundred dollars a month over a long investment window will go a long way towards helping you build a solid nest.

The following table illustrates this point:

If you start saving $ 300 a month aged:

Here's what you want by age 67 (assuming an average annual return of 7%):

22

$ 1.03 million

27

$ 719,000

32

$ 498,000

]

$ 340,000

42

$ 228,000

47

$ 147,000

TABLE AND CALCULATIONS OF CARS.

As you can see, saving a modest amount (in this case $ 300 a month) can periodically do wonders for the pension over time, especially if you carefully invest your savings. The average annual return of 7% in our example above is based on a stock-heavy portfolio, and there is actually a few percentage points below the stock market's historical average.

Although you are willing to downgrade your lifestyle in retirement, Social Security will probably not pay all your bills. The best way to avoid tiring is to save for the golden years themselves, even if it means making some victims along the way.

At the same time, aim to get the most out of Social Security as you possibly can. This may mean that you delay the benefits beyond full retirement age to increase them in the process, or even take simple steps to see your income records to ensure they accurately report your income.


Source link