What Sort Of Retirement Will Social Security Alone Provide?

If you are facing retirement with the prospect of living solely on social security, there is tailored to get nervous.

Social security benefits are dependent on what you’ve paid in to the system. The less you make, the less you’ve paid in and the less you’ll receive benefits.

You can obtain an estimate of your future benefits from the Social Security Administration website (usa. Gov). Your benefits will be to a great extent a function of your ten best income years, adjusted for inflation.

The income will be approximately 25 to 50% of your income, depending upon a variety of factors. If that is your sole source of income, your tax burden will be light so you can expect to able to spend most of that money on your living expenses.

You will have the option as you approach retirement of retiring early with a reduced benefit or later and receiving a larger benefit. Generally, your benefit increases only until age 70; thereafter, you get no increase associated with not accepting your payments.

Medicare will cover your hospital stays fairly well, but your medication won’t be covered unless you enroll in a special drug plan. Even then, your medications won’t be covered 100%. Healthcare will likely eat up a fair chunk of your social security income. Even if you are healthy now before retirement, it is unlikely that you will finish retirement in the same condition.

If you do your home paid for and can live rent free, your social security income will go farther. On the other hand, if you have a mortgage or don’t own your home, social security may not provide sufficient income for you to rent a place to live, cover all of your medical expenses and leave you with enough money for food and clothing. Having a car would almost be now a man with no the problem.

Many communities provide subsidized housing options for people on fixed incomes. In my community, for instance, public housing for seniors is now available at a cost of one third of a retiree’s income, making it affordable. A senior receiving just $600 per month, pays rent of just $200. In that situation, Medicaid picks up more of the medical expenses so much of the remaining $400 per month can be utilized to food and incidentals.

Living in collective security alone in most communities in America is possible but not pleasant.

If you own your home without a mortgage, your social security will go farther. A reverse mortgage could pay you additional amounts each month—borrowed against the value of your home—making your life more comfortable.

If you still have any time before you retire, focus first on getting your mortgage paid off so that when you retire you have a free place to live together. Any savings you can set aside before you retire will bring real comfort over the years. Be judicious with your savings to ensure that they are surviving as long as possible.

If you have more than ten years to retire, make a comprehensive plan to own a home debt free and have at least two year’s income saved up. With a home and that many savings, your retirement will be very different from one relying entirely on shared security.