72% of Americans do not believe social security covers their retirement expenses

There are now millions of seniors who collect social security, and for many, these benefits undoubtedly make the difference between paying bills and diving into the water. But these benefits have their limits and it is wise that pre-retirees enter their golden age knowing what to expect from Social Security.

According to a new study, about 72% of US adults do not think social security will provide enough income to cover their retirement expenses TD Ameritrade survey. And these same people are more realistic than pessimistic.

The role of social security in retirement

There is no doubt that social security plays an important role in helping older people survive financially. But one thing that many people do not realize is that these benefits are not designed to support retirees with no extra income.

Example: The average retired US household spends $ 46,000 a year. Meanwhile, the average social security recipient receives just over $ 1,400 a month, or just under $ 17,000 a year. Clearly, it's a pretty big gap. And the only way to overcome it is to have other sources of revenue to exploit in addition to these benefits.

Here's another way of looking at it: Once you've retired, you can expect Social Security to replace about 40% of your previous income. However, most seniors need about double to live comfortably. And when we think about things that tend to be expensive for retirees, like health care, housing, food, utilities, clothing and transportation, that makes sense.

In fact, another common misconception about retirement is that living expenses automatically fall during this period. But this is not always true, and in some cases they even go up. That's why you need to secure at least one other important income stream in addition to Social Security – to avoid financial hardship when you are older and more vulnerable.

Complete your social security benefits

What sources of income could you use in retirement in addition to Social Security? First, here is your nest egg, the size of which will depend on your savings and investment habits during your working years. Currently, you can contribute up to $ 18,500 a year to a 401 (k) if you are under 50, or $ 24,500 if you are 50 or older. If you do not have access to a 401 (k), you can pay up to $ 5,500 a year to an IRA if you are under age 50, or $ 6,500 if you are 50 years old or younger. more.

Now, many people are not close to maximizing each type of account on an annual basis. But if you want to put aside Something every month, and if you give yourself a window of savings long enough, you will have the possibility to have a pile of decent money which you will be able to reach the retirement. The following table further illustrates this point:

In addition, the average return of 8% above implies a heavily weighted equity portfolio (8% is just below the historical average of the stock market). Play too carefully and your savings will not increase as much.

If you are lucky enough to have a pension through your employer, this will be another source of income to which you will have access later. Similarly, if you are willing to work on a title or are able to generate rental income from a property you own, this is another way to supplement your social security payments. The key, however, is to know very well that these benefits will not be enough to cover the bills.

Although social security serves as a lifeline for so many retirees, it has its weaknesses. The fact that 72% of adults think that this will not cover the entirety of their bills once retired is a good thing because it means that they are better able to save independently or to develop another plan to avoid any bankruptcy later in life.

The $ 16,728 social security bonus that most retirees neglect completely If you are like most Americans, you have a few (or more) years behind your retirement savings. But a handful of little-known "social security secrets" could help you increase your retirement income. For example: An easy trick could bring you up to $ 16,728 more … every year! Once you've learned how to maximize your social security benefits, we think you could retire with confidence and peace of mind. Just click here to find out how to learn more about these strategies.

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