BOSTON (CBS) –  The reality is Social Security was designed to replace about 40% of your current paycheck and less if you are a high wage earner. Currently for 26% of retirees Social Security is their only source of income.

Social Security was never meant to be your only source of income in retirement. Think about this, the average monthly benefit for a current retiree is $1,153. It is very difficult to survive on $1153 a month.

The maximum benefit for someone who has reached their full benefit age which is 66 for this year is $2,366. To get the maximum benefit you would have had to earn the maximum Social Security wage for at least 35 of your working years. That amount for this year is $106,800. But you still only get $28,392 a year.

Social Security benefits are indexed for inflation but for the last two years there was no increase in benefits because inflation was so low. But the cost of basic things like medical care, gas and groceries somehow went up with low or no inflation

And before you even get your Social Security benefit check Uncle Sam will deduct your share of Medicare payments you need to make each month. Oops, I forgot to mention that you may owe taxes on your Social Security benefits as well.

Now I do think Social Security will be around for the Boomers, not so sure though about what will be left for our grandkids. We may be screwing them royally right now with this huge deficit we are creating which reached over $14 trillion last week.

The Social Security Administration has enough dollars in their trust fund to last until 2037. After that they will have about 70% of what they will need to pay benefits. Something needs to be done to fix the system.

Congress needs to act but no one wants to be the bad guy here. It probably will take increasing FICA taxes, increasing the age to collect full benefits and making benefits fully taxable for Social Security to survive for our grandkids.

Calculate what your fixed expenses will be in retirement and what sources of income you may have. Treat Social Security benefits as a bonus. In my book the Complete Idiot’s Guide to Retiring Early, I talk about using your Social Security benefits to pay for your health care in retirement.


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