Social Security’s purpose is to aid workers during their elderly years, but it’s not enough alone. If you’re currently relying on Social Security to be your only source of income when you’re older, then you are going to be facing a terrible financial situation.
In 2017, the average monthly Social Security stipend is $1,368 monthly, although some individuals get a higher stipend if they paid more during their working years, a lot of people receive far less.
The average monthly stipend from your Social Security would put most people at federal 2017 poverty level, $12,060 annually if used as the primary source of income. Even if you managed to receive the maximum benefit, which is extremely hard to get, that would only net $42,456 a month, which still is far below the cost of comfortable living, especially in the major cities.
People need a lot more than poverty-level income, especially seniors. Here are four reasons why you cannot live on Social Security alone and why you need to make sure you save enough for retirement.
1. Any accident that leads to unplanned expenses could be devastating.
When you crunch the numbers, you learn that the average American senior spends about $3,700 a month or $44,600 a year due to expenses such as healthcare, groceries, and housing. If you wish to live a middle-class lifestyle your Social Security benefit will be substantially lower, even if you manage to get the maximum benefit.
If your income from Social Security is at the average, then your budget will get even tighter. You’ll be forced into a low cost of living site. If you don’t, you can expect to spend your entire month of Social Security just to cover rent “The average monthly rent for a single-bedroom apartment in the top 50 major U.S. cities is roughly $1,234,” according to madison.com.
Due to Social Security benefit being too low or just enough cover essential life expenses, any attempt to save money for things such as an emergency will make you realize that it’s not possible or that it’s extremely difficult. Just about half of all seniors right now have no money saved, and unfortunately you’ll join this group if you are or plan to live on Social Security alone. Sadly, emergencies do arise, and it’s important to be prepared rather than not. If your car requires immediate repair, your fridge stops working, or you accidently hurt yourself you could find yourself in debt, difficulty paying your bills, and no savings to rely on when things get dark.
Check out the full article here for more reasons.