If you’re single, that’s technically a couple of ticks above the poverty level. However, that does not imply that a $20,000 annual income will provide a comfortable retirement.
It’s also possible that you won’t receive $20,000 every year for Social Security. For one reason, if you’re forced into retirement sooner than expected, you may need to collect your benefits before reaching full retirement age in order to have enough money to live on, reports Nasdaq.com.
You can apply for Social Security at the age of 62, but you may not have been entitled to your maximum monthly income for yet another five years. What’s the end result? By enrolling as soon as possible, you may be able to save up to 30% on your Social Security benefits.
Furthermore, if politicians do not find a method to increase funding for Social Security, payments may have to be slashed for everyone.
Payroll taxes, which many of us dread paying, are Social Security’s principal source of revenue.
However, as the baby boomer generation retires, that cash stream is likely to dwindle, leaving Social Security with a shortfall to which decreased payments may be the only option.
Don’t Put Your Retirement In Jeopardy
It’s reasonable to anticipate that you’ll receive some Social Security benefits if you quit working. However, assuming that your payments will be sufficient to support you throughout retirement is a bad idea. Even if benefit changes aren’t common, you’re likely to struggle if Social Security is your only source of revenue.
That is why it is critical to begin saving for retirement while still employed.
And if that landmark is that far away, you won’t need to spend a lot of money each week to accumulate a substantial savings account.
Assuming you put $250 a month into an IRA or 401(k) plan for 30 years, you’ll have $340,000 if your retirement assets have an average annual return of 8%, which is a few percent below the stock industry’s average. If you raise your savings to $350 per month, you’ll have $476,000 at the end of the year, assuming the same return and investing window.