If you’re a retiring senior, then it’s no debate that Social Security will provide essential benefits to support you for the rest of your life. However, relying on Social Security benefits too heavily can certainly cause trouble once you stop working.
Sadly, a tremendous amount of women are succumbing to the over-reliance of Social Security. According to new information from Nationwide, an estimated 62 percent of women workers plan to have their primary source of income for retirement from their Social Security benefits. Even worse, 18 percent of female workers plan to have more than 90% of their retirement income come from Social Security. To put it bluntly, this isn’t sustainable.
Social Security alone can’t pay the bills
Despite the common belief, Social Security was never meant to entirely sustain retiring workers. Instead, it was supposed to support seniors’ income. Nowadays, Social Security will compensate about 40 percent of the average worker’s pre-retirement income. Many seniors, on the contrary, require upwards of 80% of their career earnings to live a comfortable life, with a healthy life being defined as enough income to sustain basic living expenses. People planning on traveling a lot or taking part in a lifestyle of recreational activities require a lot more.
This is exactly why it’s a terrible idea to rely so much on Social Security benefits. Nowadays, the typical retiree collects $1,404 every month, or just $16,848 a year. If you’re one of the women who plan to have Social Security provide near 90 percent of their income, you should reconsider and begin working on how to increase your savings.
It’s on you to fund your retirement
It’s apparent that Social Security can’t fund your retirement alone after you stop working and lose your primary income, so it’s your responsibility to begin saving. Unfortunately, it’s a lot easier said than done, especially since females typically earn less money than relevantly qualified men across occupations. However, that doesn’t mean you can’t independently work towards boosting your savings and supplying a comfortable retirement fund for yourself.
Right now, employees under 50 can contribute up to $18,500 a year to a 401(k) and $5,500 a year to an IRA. If you’re 50 or older, then your limit is raised to $24,500 a year to a 401(k) and $6,500 annually to an IRA. So if you’re 50 and you plan to retire at 67, and you begin maxing your 401(k) for the next 17 years, you’ll have $755,000 in addition to what you’ve already saved independently, with the assumption that your investments generate a 7% average annual return during that period. And that, on top of your Social Security payments could certainly provide the necessary funds for a dream retirement.
If you are looking for more information on Social Security benefits visit your local Social Security office by visiting www.ssofficelocations.org
You don’t even have to save $24,500 each year, increasing your savings rate by any amount will certainly help in the long term. If you are setting aside $300 a month for your retirement and plan to retire in 20 years, you’ll have another $147,000 saved, assuming your investments generate the average 7 percent annual return. However, if you just increase your savings to $400 a month, you’ll add 50,000 dollars to your retirement fund.