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Millions of seniors today depend on social security to pay their bills, but the financial difficulties of the program are by no means a secret. Social security has already begun to use its trust funds because its income will not be enough to meet its obligations. By 2035, these trust funds should be completely dry.
As such, many Americans are wondering if they can really rely on social security for the future. In fact, 76% of workers today fear that social security will not be there when they are ready to retire, according to Transamerica.
SOURCE OF IMAGE: GETTY IMAGES.
The truth is that while the reduction in future benefits is certainly not excluded, the program, in its current form, is in no danger of being completely bankrupt. This is because their main source of income is payroll taxes, and so as long as we have an active workforce, the program receives money. Having said that, writing off Social Security for your retirement is not such a bad idea that it could serve you need to do a better job of saving for your years of the year.
Limits of social security
Many seniors today are in financial difficulty because they derive all or most of their income from social security. But these benefits are not designed to support seniors in the absence of other sources of income.
In the best of cases, social security will replace about 40% of your previous income if you earned an average salary. If benefits are phased out from 2034, this will replace an even smaller percentage. However, most seniors need about 80% of their previous incomes to live comfortably, which means that relying solely on social security in retirement will leave you seriously short of money.
That's why you might want to train your brain to think that Social Security will not be available to you as the eldest. In this way, you can take charge of your own savings and stop excusing yourself for neglecting your nest egg.
Secure your future
Saving for retirement is easier said than done, but making some sacrifices during your working years could allow you to build yourself substantial wealth in time for your golden years. That could mean downsizing in a smaller house, getting a second job over your first job or just smarter spending, so that it stays there. money every month to keep your IRA or 401 (k).
How much savings could you accumulate through your efforts? It depends on your window of savings and the amount you can save regularly, but if you are young enough when you start contributing to an IRA or 401 (k), chances are you'll accumulate money. a little wealth. Here is a sample of what your nest egg might look like when you retire:
|
Amount of monthly savings |
Final balance after 40 years with an average annual return of 7% |
|---|---|
|
$ 100 |
$ 240,000 |
|
$ 200 |
$ 479,000 |
|
$ 300 |
$ 719,000 |
|
$ 400 |
$ 958,000 |
|
$ 500 |
$ 1.2 million |
|
$ 600 |
$ 1.44 million |
|
$ 700 |
$ 1.67 million |
Data source: AUTHOR.
Having a 40 year savings window puts you in a good position to accumulate a substantial amount of wealth without getting too much cash, month after month. Of course, the longer you wait to start saving for your retirement, the more money you will need to contribute to your IRA or 401 (k) for these numbers to match. Nevertheless, it is feasible if you are motivated to make this effort, and if claiming that Social Security will no longer be in the future is what it takes to ignite this fire, you'd better tell yourself that these benefits are, indeed, leave.
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