Future retirees need to recognize that Social Security benefits are inadequate for covering living expenses in retirement. With many Americans set to retire, it’s important to understand that these benefits will provide only around 40% of pre-retirement income, leaving an income gap that needs to be filled by pensions or personal savings. Moreover, recent tax implications and an ineffective COLA formula have worsened the situation, decreasing the purchasing power of these benefits over time. Understanding these realities is crucial for effective retirement planning.
Unfortunately, you don't want to count on Social Security to do more than it should because there are issues with the benefits program that you may not be aware of.
Your Social Security benefits are designed to work with a pension and savings to support you, so they replace only around 40% of pre-retirement income.
#social-security #retirement-planning #income-security #cost-of-living-adjustment #financial-literacy
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