Let's look at a figure: $1404. That’s how much retired workers receive as a monthly benefit from social security, as of 2018. Most people who are still in their youth and happy working don’t even know that by now.
It looks like a reasonable sum, considering all you can think of at the moment is that you'll likely have fewer expenses in retirement.
However, is it safe to assume that your social security will take care of your retirement? With an annual amount of $16,848, will you be able to take care of all your expenses even if they were drastically reduced? With all these questions in mind, we should find out what are the real costs of retiring on social security. Read on.
The Money Isn’t Enough
Face it, if your money isn’t enough to cater for all your expenses today, will it be able to provide for you in your retirement? At best, the amount will cover your groceries and other minor, daily expenses here and there, but what about your movement?
With this amount in mind, you’ll have to hugely cut down on your expenditure and even have to move to low rent areas. What if you have a partner that isn’t on social security? The amount may well be above the federal poverty level line for a single person, but it just isn’t enough.
It Isn’t Enough to Cover Your Living Expenses
The cost of living isn’t something that you can bet on. Due to various factors, it keeps on changing every other day. Betting your whole retirement on a system that’s bound to change is a risky move.
The only thing you can be sure of when it comes to living costs is that they will likely only go up. Unfortunately, that is how the economy works, factoring in inflation and other factors. With $1,404 monthly, how far do you think it will take you with today’s living cost? Most young, entry-level employees make more than that monthly!
Will It Be Able to Cover Your Healthcare?
Let’s forget about your living expenses for a while; aside from those, will social security be able to cover your healthcare? You’re bound to have some healthcare needs when in your senior years, and the cost of it will be expensive. Yes, you may have Medicare, but that only covers a portion of your healthcare costs.
Even if you are to sign up for premium coverage, you’ll have to use your social security amount to cover the rest. Either way, it won’t be enough to cover your healthcare and your other expenses, as well.
Changes In Social Security Could Affect Your Financial Stability
Even if the money does provide enough for you and your various expenses, have you considered changes that may happen in social security? For example, entrepreneurs would advise that you shouldn’t let your business be dependent on other businesses.
On the rare occasion that they go down, your business will still stand if it isn’t dependent on others for survival. So, why would you let your survival be dependent on social security? In the case of changes that affect how much you receive, what happens to you?
Conclusion
Living on social security alone when you retire is a risk that, if you can avoid, you avoid. The real costs of retiring on social security can’t be overstated. It is a risk that can plunge you into debt with no way of getting out. By saving and creating new streams of revenue, you can be sure to avoid living on social security alone when you eventually retire.
