Should You Write Off Social Security for Your Retirement? | Personal-finance

Unfortunately, the program’s trust funds could run out within a decade if recent projections are correct. This would make benefit cuts not a distant possibility, but a short-term one.

Will social security disappear?

While future retirees may have to contend with cuts to Social Security benefits, it’s far from the funding for the program that’s completely drying up. The latter scenario is not a concern at this time, and so there is no need to assume that Social Security will not pay you any money in retirement.

That said, even if benefits aren’t reduced, the money you receive from Social Security will usually only be enough to replace about 40% of your pre-retirement salary — and that’s if you’re on an average income. If you have a higher income, these benefits will replace your income even less.

That’s why building up a retirement nest egg is so important — not because Social Security is going away, but because even if those benefits aren’t cut, you’ll still need outside income to get by. once you stop working. And if the benefits are indeed reduced, you will need even more independent savings.

The good news, however, is that if retirement is many years away, you have plenty of opportunities to build a solid estate. Saving $400 a month in an IRA or 401(k) plan, for example, will leave you with more than $1.2 million after 40 years if your invested savings generate an average annual return of 8%, which is slightly lower than the stock market average.


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