Designed as a security net for seniors, Social Security simply does not work alone as a retirement plan. If you've decided to rely solely on Social Security benefits in your elderly years, you're most certainly bound to find yourself in dire financial straits.
At the time of this writing, the average monthly benefit payment from Social Security is currently $1404. Some seniors would receive a larger benefit if they paid more into the system, while others receive much less. Social Security alone puts nearly all seniors who depend on it solely, very close to the individual poverty level.
There are several reasons why Social Security is not a retirement plan. Among them are:
It only takes one unexpected expense to lead to disaster. Even if you earn the maximum social security benefits, your entire Social Security check will be eaten up - and then some - by healthcare, housing, and food. Your entire check could be spent just to afford your monthly rent. Emergencies happen. One unexpected car repair or home repair leaves you unable to pay your basic bills, with nothing to fall back on.
The cost of living rises faster than COLA. Social Security recipients are eligible for the annual cost of living adjustment (COLA) which is intended to protect them from inflation. Unfortunately, the adjustment is so small, that itactually fails to keep pace with actual costs of living. COLA increases have failed to keep pace with the rate of medical inflation in 33 of the last 35 years. Food and housing costs have far outpaced Social Security COLA adjustments, making your spending power smaller each year, making life harder on you as you age.
West Financial Group can help you get on the right track to retirement and help you reach your goals. Contact our team of financial experts for a consultation.