BOSTON (CBS) – The reality is Social Security was designed to replace only about 40% of your current paycheck and less if you are a high wage earner. Many experts think that number will drop to about 30% by 2030 adjusting for higher Medicare premiums, taxation of benefits and increasing retirement age.

Social Security was never meant to be your only source of income in retirement. Currently for 1/4th (26% ) of retirees Social Security is their only source of income.

The average monthly benefit for a current retiree is a bit more than $1,300 ($1342). It is very difficult to survive on that in Massachusetts.

The maximum benefit for someone who has reached their full benefit age, which is 66 for this year, is $2,687. That’s a little more than $32,000 a year. 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 $127,200.

Social Security benefits are indexed for inflation but there were 3 recent years, 2010, 2011 and 2016 where there was no increase in benefits because inflation was so low. But the cost of basic things like medical care and groceries somehow went up even with low inflation.

And before you even get your monthly Social Security benefit check Uncle Sam will deduct your share of Medicare payments for part B and part D. Oh, and 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 is $19.8 trillion and is increasing every day and is expected to reach $20 trillion by the end of the year.

The Social Security Administration has enough dollars in their trust fund to last until 2034. After that they will have about 75% of what they will need to pay benefits.


You can hear Dee Lee’s expert financial advice on WBZ NewsRadio 1030 each weekday at 1:55 p.m., 3:55 p.m., and 7:55 p.m.

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  1. Mary Nikko says:

    Social Security should only be one of several streams of income during retirement. The key is to
    start saving/investing early in life and be consistent (save with every paycheck). Taking advantage of a matching 401k plan should be a no brainer. The power of compounding is lost on many people. Also maxing out contributions when possible, eliminating debt, avoiding risks with your nest egg, planning for multiple streams of income once retired (social security, pensions, dividends, part time work, etc.) and making catch up contributions once you reach 50 should all be part of everyone’s plan. And work at staying healthy to reduce illness, injuries and medical costs. I recently found the site Retirement And Good Living which provides information on all these issues as well as many other retirement topics and also has several retirement and health calculators.

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