The ‘Barron’s Roundtable’ panel provides information and analysis on smart ways to invest for retirement.
Many people assume that after they retire, they will be able to live on the income received from Social Security. But is it really so?
If you are convinced that you can manage only with Social Security, consider the following: in 2021, the average elderly person will receive US $ 1,543 per month in benefits, taking into account the 1.3% cost of living adjustment (COLA) expected to occur in the New Year. Before that COLA, the average monthly benefit is just $ 1,523.
SOCIAL SECURITY CHECKS ARE INCREASING IN 2021. HERE IS HERE WHY BUYING ENERGY IS NOT
This is just an average. You may be entitled to a higher Social Security benefit than a typical senior citizen, based on your income history. If you are an average salary earner who expects to retire only with Social Security, you may want to rethink this plan. Otherwise, you risk running out of money later in life.
Why Social Security just doesn’t cut it
Social Security can provide a substantial portion of the income for you as an elderly person, but it should not be your only source. If you’re not convinced, ask yourself: could you really live on $ 1,543 a month or $ 18,516 a year? Otherwise, you will need to secure additional income streams to avoid money problems during retirement.
You have several options. You can plan to work part time, for example. Many elderly people do so for both financial and social benefits. A job you enjoy will take some time without requiring you to spend money.
3 RETIREMENT MARKS YOU MUST ACHIEVE UP TO 50 YEARS
If you are a home owner, you can supplement your Social Security benefits with rental income. If you have already completed a garage or basement and your local zoning laws allow it, you can rent that part of your home and use the money to cover maintenance costs.
While both ideas may work, they are not guaranteed. You may have difficulty finding a part-time job that works for you and you may encounter health or mobility problems that make it difficult to work. In addition, you may experience roadblocks when trying to rent your home, such as zoning restrictions.
CLICK HERE TO GET THE FOX BUSINESS APP
If you are eager to secure a non-Social Security income for retirement, your best bet may be to save for that period in a dedicated account, such as an IRA or 401 (k). That way, the extra money will be there for you, without you having to depend on your ability to work or secure a tenant.
Many people struggle to make space in their budgets for contributions to retirement plans. If you can only stock up to $ 300 per month over 30 years, you will accumulate $ 340,000 if the investments in your account assume that they generate an average annual return of 7% (which is reasonable for a mix of heavy stock investments) . Make $ 400 a month and you will have $ 453,000 in your name.
CLICK HERE TO READ MORE ABOUT FOX BUSINESS
As adorable as it would be for Social Security to provide enough income for most people to live, this is not the case. The sooner you realize this, the sooner you can start saving enough money to enjoy retirement.