Social security can increase your retirement savings, here's how



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While Americans across the country are facing a savings crisis, it is useful to have a plan to retire comfortably.

According to Fidelity Investments, about half of Americans are, on average, facing a deficit of coverage of essential expenses at retirement.

"It's a challenge for many Americans," said FOX Business, Keith Bernhardt, vice president of retirement income at Fidelity Investments.

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Overall, Bernhardt recommends that people put 15% of their income each year into their retirement savings in order to have enough to continue living their lives in retirement.

It may be helpful to put money in a 401 (k) plan or another employer-sponsored plan, especially when it is tied. This would be taken into account in the goal of savings of 15%. The contribution limit for the 401 (k) plans in 2019 is $ 19,000. People over 50 can save an additional $ 6,000 in "catch-up contributions".

For IRAs, the contribution limit is USD 6,000.

Health Savings Accounts (HSA) are another useful tool. An HSA is an account in which a person pays pre-tax dollars for the express purpose of spending those funds on future medical expenses. HSAs can be used to cover all costs, from the cost of dental care, vision care and prescriptions up to Medicare premiums.

In addition, social security is "a very important factor that should come into play," said Bernhardt.

However, many people have fairly serious misconceptions about the program, which was intended solely to supplement retirement savings, not to replace it. As previously reported by FOX Business, one in four Americans think they can live alone on social security. Others believe that if they claim their benefits at age 62, they will increase over the years.

Misconceptions can lead people to make uninformed decisions. Some people claim early benefits, for example, because they think the program is going bankrupt, while others are doing it on the basis of hearsay or advice from family and friends.

"One of the most powerful things that people can do is to delay taking social security," Bernhardt said. "Every year, you delay the increase of the payment of about 8% per year. It could make a big difference in your life. "

The benefit reduction for those claiming at age 62 is 25%, 20% for those at age 63, 13.3% at age 64, and 6.7% at age 65. This means that it might be interesting to stay in the job market a few more years.

People may be worried because social security reserve funds should be exhausted by 2035, according to the annual report of Social Security and Medicare administrators. At that time, approximately 80% of benefits will be payable.

However, for today's workers, Bernhardt said social security was something people could count on, even if the program was changed or adjusted.

"It's a very important part of the finances of Americans, I think it's fair to expect that to last long enough," he said.

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Working with a financial advisor has been helpful. Those who worked with an expert received 15% more benefits on social security life – $ 1,551 per month versus $ 1,324.

It is also important to note that if you have recently filed, but think you have made a mistake, you can cancel this decision in 12 months. To do this, you pay all the money in a lump sum, suspend your account and it will continue to grow until you are ready to apply for benefits in the future.

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