Many young people feel that by the time they retire, there won't be any social security money. Although people have been saying this for the last thirty to forty years, social security is still going strong. However if you're planning for your retirement, don't put all your eggs into one basket and depend on your social security alone. This article will highlight the reasons why you should have additional retirement plan in place.
Firstly we know that social security is a part of taxes that is deducted from our salaries on a monthly or biweekly basis. This money is then paid to those people who have already retired. But here are five reasons why social security alone may not be enough:
Social Security Administration sends a letter each year detailing your benefits. This statement will tell you how much money you will receive if you continue at your current level of earnings until the age of sixty two. The average social security benefit is only forty percent of what you've earned before you retire. Now think about this, can you really live on only forty percent of your salary?
You may not feel the steady climb of inflation while you working, but think on this, by the time you retire, your social security benefits will not be enough to pay your living expenses. Even though your home may be paid by then, but there are still bills to be paid, like utilities, gas and grocery etc. The social security just might not stretch that far without other forms of income.
If you start to receive your social security at age sixty-two, as entitled to by law, you will only receive three-quarters of your full benefit during retirement. In order to get the full amount, you must be ten months past your sixty-fifty birthday or at the age of sixty-six to get the full benefits.
If something happens to you, your spouse will only be entitled to part of your social security benefit. While social security is not enough for even a single person, it definitely won't be enough for a burial.
Diversity is good for retirement planning, as you don't want to just put all of your hopes into one plan, you should plan for all eventualities. You can contribute to an employer's savings plan, open certificate of deposits and money market accounts, invest in other areas and make your money work hard for you. You can always do with more money at retire, in case you need it!
There is a saying: “Wise men hope for the best, but plans for the worst. " Social security is a something the government have in place for everyone's retirement. But there are other options out there that you can try. The more you can do, the better you'll be prepared.
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