When you analyze the reasons why such a high percentage of people have not made any retirement plans you have to assume that many of them have overly optimistic expectations regarding Social Security. This program is intended to be a safety net that can supplement your retirement income, but it is not an end-all in and of itself.
A recently conducted poll of baby boomers who are nearing retirement age found that most of the respondents were going to be relying on Social Security to make up the lion’s share of their retirement income. The Social Security Administration tells us that about one-third of the people who are receiving Social Security state that their benefit comprises at least 90% of their income.
The averages are going to fluctuate as new people become eligible for Social Security and others pass away, but the most recent figure that is being used by the Associated Press as the average monthly Social Security payout is $1,082. When you combine this with the statistics quoted above regarding how so many people are relying almost exclusively on Social Security you see a rather disturbing picture emerge.
There are cost of living adjustments that are connected to inflation that can increase Social Security benefits. There were no adjustments in 2009 or 2010, but it has recently been announced that there will be a COLA added to the Social Security benefit of seniors at the beginning of 2012. The amount of this cost of living adjustment is 3.6%, and this will add about $39 to the average monthly Social Security check. Given the fact that out-of-pocket health care costs for seniors have gone up by 14% over the last two years, our nation’s elders are actually losing footing in spite of this increase.
The best way to response to the limitations of Social Security and Medicare is to plan ahead carefully so that you are not overly reliant on these programs. To create an intelligent plan for the future, take a moment to pick up the phone and arrange for a consultation with a licensed retirement planning attorney.
Mr. Kraft assists clients primarily in the areas of estate planning and administration, Medicaid planning, federal and state taxation, real estate and corporate law, bringing the added perspective of an accounting background to his work.