Understanding how much your Social Security checks will be is important because your benefits may not be as much as you think.
When you’re retired, Social Security is undoubtedly going to help you pay the bills. Most retirees rely on the program for at least some income, and many depend on these benefits to be a major source of the money they need to cover their costs.
Unfortunately, one harsh truth that many retirees realize too late is that these benefits may not do nearly as much as they expect them to. It’s worth taking a hard look at what Social Security actually offers so you can have a realistic plan for how much the program will support you when you’re retired.
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How much income does Social Security actually provide to the typical senior?
The amount that the program provides the typical senior is $2,071, according to the Social Security Administration. With a monthly payment of $2,071, that leaves a retiree with annual Social Security income of $24,852. Since the typical retiree needs more than that to live on, the program by itself isn’t going to cut it.
Seniors who only get the average benefit will probably struggle to cover basic living expenses and may have a hard time making ends meet — unless they have money coming from retirement plans they can use along with their Social Security checks.
Some seniors collect more than the average monthly check. However, even if your benefit is well above average, it doesn’t mean you can count on Social Security without having extra money in a 401(k) or an IRA.
If you want a comfortable retirement, having supplementary savings is crucial because Social Security is intended to replace only about 40% of pre-retirement benefits The minimum recommended replacement rate is around 70% of pre-retirement earnings — and ideally closer to 80% to 90%.
Save money to supplement Social Security so you don’t struggle as a retiree
You should save and invest throughout your retirement to have money to live on in your later years. Start today if you’re currently working, and make sure to invest wisely so you aren’t left struggling with financial worries later in life.
