Millions of seniors depend on social security to pay the bills in retirement – but many do so unhealthy. An estimated 21% of older married couples and 44% of older single people rely on their benefits to provide 90% or more of their income. And if you are planning to follow a similar pattern, let this be a warning: over-reliance on social security can mean that you condemn yourself to a life of poverty – or almost poverty – when you retire . And honestly you deserve better.

You can not only live on social security

Many working adults assume that social security will pay their bills as soon as they retire. Not so. These benefits are only intended to replace around 40% of the average employee's income before retirement, but most seniors need almost twice that amount to live comfortably when their careers come to an end.

The reason? Many of your current expenses are likely to remain the same at retirement, if not to go up. In fact, 46% of households end up spending more money, no less, during their first two years of retirement, according to data released a few years ago by the Employee Benefit Research Institute. Meanwhile, 33% of households spend more money during their first six years after career. As such, social security clearly can not provide enough income to buy most seniors the respectable lifestyle they seek when they stop working.

This is why it is particularly problematic: as many as 42% of today's employees do not save for retirement, which means that they run the risk of going to social security as their sole source of income when they are older. If you are one of them, consider this as a wake-up call to make a contribution to an IRA or 401 (k). Otherwise you might become miserable during your retirement, not to mention broke.

Save now, stress less later

If you are not convinced that social security will fall short in covering your pension expenditure, consider this: the average recipient will receive $ 17,532 in the annual income today. If that sounds like enough money to live on, then you are free to stop reading. Otherwise, you start with setting some money aside per month, even if it's only $ 25 or $ 50 to start with. As your income increases, you can allocate your increases to long-term savings and rise in that way.

View your monthly expenses at the same time and find ways to cut costs. That may mean that you reduce your living space, that you lose your car if the bus is much cheaper (which is probably the case) and stop eating as often as you do. Other option? Look for a rush to earn extra money for retirement savings. Socks away even a few hundred dollars a month over a long investment window will go a long way towards helping you build a solid nest.

The following table further illustrates this point:

If you start saving $ 300 per month at age:

This is what you will get at age 67 (assuming a 7% average annual return):


$ 1.03 million


$ 719,000


$ 498,000


$ 340,000


$ 228,000


$ 147,000

As you can see, saving a modest amount (in this case $ 300 per month) can wonders on a regular basis for your pension over time, especially if you invest your savings wisely. The average annual return of 7% in our example above is based on a stock-intensive portfolio and is actually a few percentage points below the historical average of the stock market.

Even if you are willing to retire your lifestyle, social security will probably not pay all of your bills. The best way to avoid getting into trouble is to save for your golden years alone, even if that means you have to sacrifice something along the way.

At the same time, try to get the most out of social security that is possible. This may mean that you postpone the benefits after the full retirement age to encourage them in the process, or even take simple steps, such as checking your income statements to ensure that they accurately report your earnings.

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