Have you ever wondered whether the nest eggs of other Americans are the same as your retirement savings? Have you ever asked yourself whether you can live off of your income from your post-work years? It may be normal to become curious regarding the average retirement income in the United States. Always remember that being able to keep up with the Joneses isn't your goal when you retire. It's having enough in the days of your retirement and being able to meet all of your needs.
Everyone knows that the wise course of action is saving for retirement. That is the reason why there is Social Security. It is a form of forced savings that can divert your income during your working years to your golden years. Yet, benefits in Social Security did not get designed to be the American’s only source of retirement income. Because of this, it is essential to save for your retirement on your own or through an employer-sponsored plan.
As per the Social Security Administration, benefits in Social Security can make up around 38% of the elderly’s income. People who are single heavily depend on Social Security checks compared to married individuals. In the year 2014, Social Security provided an average monthly retirement income of $1,294 which is $15,528 a year in Social Security benefits.
Always remember that the Social Security benefits may even be smaller. If you have not worked for 35 years, your claim benefits would be consistently low compared to waiting until the full retirement age of 70. You can only expect a minimal monthly check. Aside from that, there is also a gender gap when it comes to Social Security income. Since women work fewer years and earn less, they usually get Social Security checks that are smaller compared to men.
If you make more money in your career, there will be a greater gap between your benefits in Social Security and income needs. In case you belong to a family of four with a couple of high earners, a high-rolling lifestyle and a huge fancy home, it may be more difficult to get by on Social Security compared to a person who is used to the income of the lower-middle class. Because of this, you need to be able to allocate a significant sum to your retirement savings while you are working so you won’t risk any downturns in the quality of your life when you retire.
In case you are married, always remember that your decisions related to retirement could also affect your partner. Spouses who survive and claim Social Security benefits only have an average monthly income of $1,244. The amount a surviving spouse can get from Social Security depends on the other spouse’s work history – and on when that spouse claimed Social Security. In other words, less money in survivor benefits will be given to spouses of folks who start claiming Social Security at age 62.
In the United States, there may be some news about the impending shortfall in retirement income. A lot of articles have featured the words “disaster” and “crisis” because a significant percentage of Americans do not have enough retirement savings.
According to research done by the Federal Reserve, the median retirement account balance of Americans was only $59,000 in the year 2013. They only have the mean balance of $201,300. If you look at a retired couple's medical costs at $200,000 as a recent estimate and assuming both retire at 65, the woman may end up living up to 85 while the man lives to 82 which is not a very good situation if you think about it.
It may be great to have Social Security benefits but they cannot survive on their own. If you want to be able to add to your Social Security checks with other sources of retirement income, you will have to start saving now. If you start contributing to your retirement account earlier, you can expect more financial comfort after your work. When the time comes for you to draw down your retirement savings, it is essential to be strategic so you can optimize the money you have worked so hard to save.
Whenever you become unsure where you can begin or if you are on track to meet all of your needs, you may seek help from a financial advisor who knows and understands all of your individual goals.
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