BUT THE BIG QUESTION IS, CAN YOU COUNT ON SOCIAL SECURITY?
According to the newest report from the Social Security Board of Trustees, the program is set to face some major headwinds within the next two decades. By 2022, it'll begin paying more in benefits than it's collecting annually in revenue, which will result in a cash outflow from its nearly $3 trillion in asset reserves. By 2034, the trustees report projects that the program's asset reserves will be completely wiped out.
The end result, say the trustees, is the possibility that benefits could be cut on an across-the-board basis by up to 23%. In constant dollars, the average retired worker is currently bringing home about $1,372 a month, or close to $16,500 a year. If those payouts were cut by 23%, the average retired worker would see his or her monthly stipend drop to $1,056, or close to $12,700 annually. That's less than $1,000 above the federal poverty level.
With that been said social security, will be there for your retirement, at least most of it, but is not something that you could count completely. There are other options to prepare for a prosper retirement, with many vehicles like IRA or 401K plans.
I will give you 3 facts that you should consider so you can start a backup plan as soon as possible.
1. Social Security isn't designed to sustain you in retirement
Though Social Security serves as a crucial source of income for millions of retirees, it was never supposed to be seniors' only source of income. In fact, the Social Security Administration itself states that its benefits will replace about 40% of the average worker's previous income. Most people, however, need 70% to 80% of their former income to cover their living expenses in retirement, especially when you consider the astronomical cost of healthcare. And while those who live frugally might get away with a lower threshold, generally speaking, 40% income replacement target just won't cut it.
2. Social Security does a poor job of keeping up with inflation
Back in 1972, Congress enacted a provision for automatic annual cost-of-living adjustments, or COLAs, for Social Security beneficiaries. The purpose of COLAs is to help protect seniors from the effects of inflation by gradually increasing benefits. The problem, however, is that in recent years, seniors' actual expenses have outpaced their COLAs.
3. Social Security benefits might get cut down the line
According to the Social Security Board of Trustees' latest report, the program's combined trust funds will run out in 2034. When this happens, the program will have to rely on incoming taxes to continue paying benefits. Now this isn't to say that Social Security will be going away come 2034, but it does mean that anticipated tax revenues will probably only cover 75% of scheduled benefits. In the absence of reform to the program, future recipients might lose out on 25% of the benefits they'd otherwise be entitled to.
so my advise to you guys is this, start educating yourself more about the topic, start learning about retirement and savings vehicles for retirement, cover all your bases thinking with a what if?, that will give a perspective.
if you a question, please feel free to ask, we will respond.
The end result, say the trustees, is the possibility that benefits could be cut on an across-the-board basis by up to 23%. In constant dollars, the average retired worker is currently bringing home about $1,372 a month, or close to $16,500 a year. If those payouts were cut by 23%, the average retired worker would see his or her monthly stipend drop to $1,056, or close to $12,700 annually. That's less than $1,000 above the federal poverty level.
With that been said social security, will be there for your retirement, at least most of it, but is not something that you could count completely. There are other options to prepare for a prosper retirement, with many vehicles like IRA or 401K plans.
I will give you 3 facts that you should consider so you can start a backup plan as soon as possible.
1. Social Security isn't designed to sustain you in retirement
Though Social Security serves as a crucial source of income for millions of retirees, it was never supposed to be seniors' only source of income. In fact, the Social Security Administration itself states that its benefits will replace about 40% of the average worker's previous income. Most people, however, need 70% to 80% of their former income to cover their living expenses in retirement, especially when you consider the astronomical cost of healthcare. And while those who live frugally might get away with a lower threshold, generally speaking, 40% income replacement target just won't cut it.
2. Social Security does a poor job of keeping up with inflation
Back in 1972, Congress enacted a provision for automatic annual cost-of-living adjustments, or COLAs, for Social Security beneficiaries. The purpose of COLAs is to help protect seniors from the effects of inflation by gradually increasing benefits. The problem, however, is that in recent years, seniors' actual expenses have outpaced their COLAs.
3. Social Security benefits might get cut down the line
According to the Social Security Board of Trustees' latest report, the program's combined trust funds will run out in 2034. When this happens, the program will have to rely on incoming taxes to continue paying benefits. Now this isn't to say that Social Security will be going away come 2034, but it does mean that anticipated tax revenues will probably only cover 75% of scheduled benefits. In the absence of reform to the program, future recipients might lose out on 25% of the benefits they'd otherwise be entitled to.
so my advise to you guys is this, start educating yourself more about the topic, start learning about retirement and savings vehicles for retirement, cover all your bases thinking with a what if?, that will give a perspective.
if you a question, please feel free to ask, we will respond.
No comments:
Post a Comment