Are you retirement ready? Many workers are not confident about their retirement plan. This two-part series explores the role Social Security will likely play in your retirement, and what you can start doing today to help boost your nest egg.
Counting on Social Security to fund your retirement?
That's like banking on the federal government to pay its debt.
In both cases, you'll come up short.
"People are living longer and taking more out of Social Security, and you've got fewer people supporting it. That is one of the major dilemmas," says Dale Repass, chief executive officer of First Community Trust. The Dubuque-based investment management company is partners with Dupaco.
The Social Security landscape has changed dramatically over the years.
When the system started, there were about 15 workers for every Social Security beneficiary. Today, there are about three workers for every retiree. And by 2033, it is expected that there will be two workers for each Social Security beneficiary, according to the Social Security Administration.
What does that mean for today's typical retired worker? This year, retired workers received an average of $1,234 in monthly Social Security benefits, representing about 39 percent of seniors' incomes, according to the administration.
In many cases, however, Social Security plays an even smaller role in retirees' post-work income. In fact, Social Security is estimated to represent about 19 percent of the retirement income for people ages 65 and older with an annual income of more than $44,129, according to Repass.
"You have several different aspects of what is going to support you in retirement," Repass says. "How you structure those investments is very important. You need to have that nest egg grow each year to keep up with inflation."
To ensure a comfortable lifestyle during retirement, it's vital to both establish and maintain a savings plan that bridges the gap between the income needed to retire and the income that Social Security provides. Read our next post for tips on mapping out a smoother route to retirement.