Social Security is a big help for those retired people who survive on this monthly benefits. It helps retired people of United States to pay for their necessary things like food, housing and healthcare.
But what if Social Security will not pay your full benefits anymore?
According to some expert the Social Security trust will get run out of money by the year 2033. This will be a big problem for most of the retired person in the United States.
By the year 2033, it is expected that the fund will completely empty. After that the Social Security will not be able to pay the full benefits. Retirees will only get 77% of their full benefits.
For example, if someone is getting $2,000 a month. They can lose about $460 each month. That will be $5,500 for a year.
Many people are worried about this. A study found that more than half of U.S. people who are working will not get the same benefits like today. This is a real concern that will affect a lot of people financially.
What you can do?
If Social Security can not pay full benefits in future, then how much more will you need to save?
Experts say you will need an extra $138000 savings to make up for the shortfall. This is based on the idea that retirees will take out 4% of their savings each year.
It is not too late to start saving. But the earlier you start, the less you will need to save each month. If you are older, you need to save more.
Here is how much extra you will need to save each month, depending on how old you are:
- If you are 55 years old, you will need to save an extra $701 a month.
- If you are 45 years old, you will need to save an extra $288 a month.
- If you are 35 years old, you will need to save an extra $146 a month.
- If you are 25 years old, you will need to save an extra $81 a month.
So if you start saving early, you do not have to put away as much each month.
How to save more for your retirement?
If you are over 50, take advantage of catch up contributions. This means you can save extra money in your retirement accounts to help boost your savings.
If your job offers a retirement plan with an employer match, then make sure you are contributing enough to get the full match. This is free money that can help you save more.
Having fewer retirement accounts can make it easier to keep track of your savings and lower fees. If you have several accounts you should consider combining them into one.
Don not put all your money into one place. Spread it out across different types of investments. So you can reduce risk and increase your chances of growing your savings.
Every time you get a raise you should also increase how much you are saving or investing. Even small increases can make a big difference over time.
Why you should be careful as an American?
The situation with Social Security is making a lot of people nervous. A recent study found that 64% of Americans are worried about running out of money in retirement than about dying.
And this is the main reason why many people are starting to file for Social Security earlier than they originally planned.
The future of Social Security is very much uncertain. But you can still take control of your own financial future. The best thing you can do is start saving more today.
Remember the line that “The earlier you start, the easier it will be to build a strong financial foundation for your retirement”
If you are a retired person, then do not worry. You will get your Social Security benefits.
Remember that Social Security is not going to bankrupt. It just may not be able to pay full benefits in the future. By saving more you can make sure that you will still have enough money when you retire. Even if Social Security does not cover your full expenses.
