For many retirees, Social Security is a critical source of income, but it shouldn’t be their sole means of support. While some retirees can rely on a combination of savings, investments, and part-time earnings, many still rely on Social Security benefits.
However, if you’re nearing retirement, relying too heavily on Social Security alone could set you up for financial struggles.
Don’t Overestimate Your Social Security Benefits
One of the biggest mistakes retirees make is assuming Social Security will replace their entire paycheck after retirement. Unfortunately, Social Security generally only replaces about 40% of an average earner’s pre-retirement income. This means that living on Social Security alone likely won’t provide enough to cover your living expenses.
While some expenses might decrease in retirement, such as debt repayment, most retirees will still need between 70% to 80% of their former income to maintain a comfortable standard of living.
Social Security alone won’t provide that much, and you’ll likely fall short if you’re not supplementing it with additional savings or income sources.
How to Know What to Expect from Social Security
If you’re still years away from retirement, it might be tough to estimate your retirement income needs. However, the earlier you start planning, the better prepared you’ll be.
To get a clear picture of your future Social Security benefits, create an account on the Social Security Administration’s website. It will allow you to access your earnings statement and get an estimate of your monthly benefits based on your wage history.
Alternatively, you can use the SSA’s quick calculator to estimate your future benefit. This will show you how much you can expect to receive, both in today’s dollars and future dollars that account for inflation.
The earlier you review your estimated benefits, the more time you’ll have to adjust. If you discover that your Social Security income will be lower than you expected, you can take action to boost your savings by contributing more to your 401(k) or IRA, giving you years to benefit from compounded growth.
The Importance of Additional Retirement Savings
Although Social Security provides a safety net, retirees who rely solely on these benefits risk not having enough to cover all their expenses. Start taking proactive steps now to increase your retirement savings so you can comfortably meet your financial goals.
Recognizing that Social Security is only a small percentage of your pre-retirement income will allow you to take action now and prepare financially for the future.
A $23,760 Social Security Bonus Many Retirees Overlook
For many Americans, retirement savings are often insufficient. However, there are little-known “Social Security secrets” that could help increase your retirement income.
Maximizing these opportunities could potentially give you a $23,760 bonus to boost your retirement funds. Don’t miss out on these hidden benefits when planning for your future!
