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Millions of seniors today depend on social security to pay their bills in retirement. But because the program is facing serious financial problems, much of the current workforce is uncertain whether these benefits will actually be available to them in the future. So, it might be a good idea to simply forget Social Security and do your best to save enough money to cover the full amount of your retirement. And if you ask the millennial generation if this approach makes sense, a lot of them will probably agree.
In fact, according to Provision Living's data, 37% of millennials think that they will no longer need social security once they are about to retire. The problem, however, is that many young adults are by no means on the brink of covering their living expenses in the future. It is estimated that about 43% of millennials have less than $ 5,000 for their retirement, and if they do not start doing better, they will eventually depend on these benefits, whether they want it or not. no.
SOURCE OF IMAGE: GETTY IMAGES.
Social security will not be enough
Planning a retirement without social security is a much wiser practice than going to the opposite extreme – assuming this will be enough to fully cover your living expenses for the elderly. In fact, at best, these benefits will only replace about 40% of your previous income if you earned an average salary. Most people, however, need more than 80% of their previous income to be able to cope with their retirement bills, which means that they need substantial savings to fill this gap.
In addition, the future of Social Security being uncertain, it is possible that the beneficiaries will benefit from a reduction in benefits of up to 21% if the program 's trust funds are up to 21%. exhaust in 2034 as planned. If this happens, social security will play an even smaller role in helping retirees pay their bills. Therefore, the fact that more than a third of millennials plan to retire without these benefits is not a bad thing at all.
The problem is that a large number of young workers have not yet managed to breach their eggs. Of course, if there is one thing that millennials have in their corner, that is the time. A 30 year old man today without savings could easily accumulate a significant amount of wealth in time for retirement simply by setting aside a modest amount each month, investing it and letting it grow. The key, however, is that millennia without savings wake up and start making more efforts, whether or not they want to integrate social security into their retirement plans.
Small contributions go a long way
Saving money for retirement is easier said than done when the most immediate expenses of life interfere. But waiting too long to accumulate a nest egg can lead to a serious lack of savings, which you will regret when you are older. If you have money savings, think about that.
Fortunately, you do not have to go crazy at the maximum of a 401 (k) to accumulate enough wealth to be able to retire comfortably (though, if you are able to, of course). All you have to do is save consistently and invest wisely.
The following table shows how much you could save if you started now:
|
Amount of monthly savings |
Total accumulated over 35 years (assuming an average annual return of 7%) |
|---|---|
|
$ 300 |
$ 498,000 |
|
$ 400 |
$ 663,000 |
|
$ 500 |
$ 829,000 |
|
$ 600 |
$ 995,000 |
|
$ 700 |
$ 1.16 million |
TABLE AND CALCULATIONS BY THE AUTHOR.
As you can see, everything is obviously not lost, even if you may have missed out on saving for the future in the first decade of your career. And if you're wondering, the 7% yield used in the chart above is actually a few percentage points less than the stock market average, which means that if you consume shares in your plan of retirement, you will have done it well or better with time.
Disregarding social security and using the resulting money gives you a premium, so to speak, is a solid approach to retirement. But to adopt this strategy, you will need to save enough to make up for it. Although these benefits do not fully cover your bills as a senior, it is likely that they will eventually help to a certain extent. The extent to which you will actually rely on them, however, will depend on the quality of your savings efforts throughout your career.
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