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Social Security Was Never Intended to be Your Only Retirement Fund - MSN.com
Social Security was created as a safety net to keep seniors out of poverty. Social Security was never intended to be your only source of income to live on when you retire.
The retirement model is a three-legged stool. 1) Employer retirement funds, pensions, and 401 (k) s. Pensions are disappearing, placing the investment burden on the individual. 2) Personal savings and investments, such as IRAs. 3) Social Security.
There are approximately 21.8 million people who live just on their Social Security benefits, and appoximately 73% who depend on Social Security for half of their income. Social Security is currently facing a 23% reduction in 2034 if Congress doesn’t act soon. Should this happen (we don’t think Congress will allow it to happen), it will affect current and future beneficiaries.
If you are someone who is going to depend heavily on their Social Security benefits in retirement, you should consider maximizing your benefits as much as possible. This is not always possible, but if it is, you should consider delaying your Social Security benefit as long as you can. Your benefit will grow 76% between the ages of 62 and 70. For example, if you have a full retirement age (FRA) of 67 and your benefit at that time will be $2,000, if you take your benefit at age 62, you will receive $1,400. If you delay taking it until age 70, you will receive $2,480. This increases your income from $16,800 per year to $29,760.
Your Social Security benefit is based on your highest 35 years of earnings. If you don’t work 35 years, Social Security adds zeros to make 35 years, which reduces the amount of your benefit. So, if at all possible, work for 35 years to increase your benefit. For spouses who were unable to work for 35 years, including ex-spouses if you meet the requirements, there may be spousal and survivor benefits available to you, even if you didn’t work.
You also need to consider the cost of Medicare and taxes on your Social Security benefits. Medicare Part B is currently $185 per month and may increase to $206.50 per month in 2026. Your premium will be deducted directly from your Social Security check. You may also pay taxes on up to 85% of your Social Security benefits, depending on your other income. Currently, approximately 40% of Social Security recipients pay taxes on their Social Security benefits.
When to start your Social Security benefits is an important decision that will affect the rest of your life. It is very important to try and save additional funds to live comfortably in your retirement years. To read the full article on MSN.com by Andrea Arlett Nabor Herrera click here ….
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