Millions of seniors rely on Social Security for their main source of income, and for many it is their sole source of income. Seniors on Social Security have lost buying power for a long time. The benefits weren't supposed to sustain retirees by themselves.
40% of preretirement wages will be replaced by social security. Senior citizens need more income than that to maintain a comfortable lifestyle.
Social Security recipients may be looking at substantial benefit cuts in a little over a decade. Social Security's trust funds will run out of money by the year 2035 according to the program's trustees. Benefits could be slashed by 20% once that occurs.
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It's an unnerving scenario for anyone who's counting on Social Security to be a reliable source of income. There's an easy way to make up for benefit cuts, and make sure they don't ruin your senior years.
It's possible to lose 20% of your Social Security benefits. If you have a solid nest egg, you won't have to worry about your benefits decreasing.
It's easy to think that a large nest egg is something you won't be able to achieve. If you're an average earner, the majority of your income goes towards living costs. It is possible if you give yourself enough time to save.
If you put $300 a month into an IRA or 401(k) plan for 40 years, you'll have $300 a month. If you invest a lot in stocks, your savings could generate an average annual 8% return, which is a bit below the market's average. You'll be sitting on a nest egg that's worth nearly a million dollars. You will be looking at a cool $1.24 million if you push yourself to save $400 monthly.
If you are close to retirement age, you may need to part with more money on a regular basis if you want to grow your nest egg. Retirement is 20 years away. If you save $500 a month between now and then, you will end up with $275,000. You can save $600 a month.
We don't know if Social Security will end up cutting benefits or if lawmakers will come up with a way to stop that from happening. If benefits are not maintained at their scheduled level, a poverty crisis among seniors could easily occur.
Everyone should be prepared for benefit cuts. Even if Social Security ends up paying you less, you might be able to continue with your retirement plans even if you don't have a strong nest egg.
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