Social Security is a system in place for retirees to help them exit the workforce and reap the benefits of a career of hard work. Unfortunately, many people plan to rely solely on the taxpayer-funded system to usher them through retirement — which is a risky prospect, especially considering the harsh realities of living on a limited, fixed income.
Reality Check No. 1: The Amount Is Way Less Than You Think
Throughout your entire career, you’ve probably gotten used to the standard of living you’ve strived so hard to maintain. If you opt to retire only on Social Security benefits, you’ll suffer from a serious slap in the face from the lifestyle shift it will cause.
The monthly Social Security retirement benefit allotment for 2018 is $1,404 per month — about $17,000 annually. For context, that’s the same standard of living as someone working for $8 per hour, which is below minimum wage in many states. You spent your entire life climbing for comfort and financial security, so don’t get reduced to living like a high schooler.
Reality Check No. 2: It’s Side Money, Not Income
If you still decide to retire on that stipend alone, it’s time to get creative. You should sit down and create a detailed budget of all of your expenses — plus any emergencies, such as a dead car battery or even a broken television set.
That being said, even the SSA themselves warns against relying on your benefits alone.
Reality Check No. 3: The Benefits Don’t Always Rise With the Times
This is a sad truth: Your benefits won’t necessarily rise along with the cost of inflation, which means your “buck” won’t have nearly as much “bang” as it did in the past. If you rely solely on your stipend to make ends meet and the cost of living begins to drastically increase, you need to be prepared to do a whole lot more with a lot less.
Reality Check No. 4: They End With You
Another reality check is that your Social Security benefits won’t work like an insurance policy. For many retirees, that hard-earned investment cash can get passed down to beneficiaries once they pass — but with Social Security, that buck stops with you…even if you only collected a single check.
Reality Check No. 5: It’s All Subject to Change at Any Point
Nothing with Social Security is etched in stone — so your retirement plans are at the mercy of the lawmakers you elect. Even in the past decade alone the program has seen major shifts and changes — all of which could directly impact your day-to-day life if you rely on it to live.