Social Security: Is It Enough for Your Retirement?
There’s a good reason why a lot of older adults are looking into investments such as auto franchise opportunities or real estate. Social Security might no longer be enough to meet their needs once they retire.
How Far Your Social Security Can Go?
Perhaps some of you will ask, “How come it won’t be enough? I’ve been putting money on it for decades!” Social Security is a government assistance program that provides financial support once a person hits retirement age.
But there’s a caveat: you’re not the only one who uses it. In fact, once you become disabled or lose your job, you can use Social Security as well. This explains why you don’t receive a large sum of money during retirement. There must be enough for everyone who needs it.
In June 2017, the average benefit for retired workers was about $1,391 a month. It was higher for a disabled employee with a spouse, as well as a widower with two children.
While it can still be a good amount of money, it might still be insufficient for the following reasons:
- Cost of Living – It varies among states. Some are significantly cheaper than the others, but you need at least $20,000 to live comfortably among the most affordable states—that’s only for a single person.
- Longevity – Granted, longevity is a cause for celebration, but it can also be challenging for others, especially those who plan to live on Social Security alone. Barring any disease or accident that can be fatal, you can live up to 80 years old. That’s about 15 years longer than full retirement age.
- Inflation – Social Security benefits can increase over time, but so does inflation. It is a rate by which the prices of commodities go up. It means the value of your money and purchasing power can go down over time. The increase in your benefits might not be able to catch up with the rise of these prices.
- Healthcare Costs – Getting sick in the United States isn’t cheap. Healthcare spending went up by almost 4% in 2017. Medical costs for every person then reached over $10,000! You can use Medicare and Medicaid, but they don’t cover all the costs. For example, Medicare doesn’t pay for eye exams for prescription glasses, long-term custodial care, and most types of dental care.
Look Into Other Options
Within the next 22 years, the retirement age will increase between 65 and 67 years old. Congress cites longevity as the reason. It implies seniors can live long enough to stay in the workforce for a few more years. But it can also be a strategy to increase Social Security contributions, making sure you can get a benefit once you reached retirement age.
The good news is you don’t need to work until you can maximize your Social Security benefits. You can retire at 60 or even younger, but it happens only when you go beyond these types of government financial assistance. Invest in a business and other assets that will grow your money faster than inflation and cost of living.