When you research the matter you find that a surprising number of Americans are relying almost exclusively on Social Security for retirement income. Obviously the more income streams you have the better, but you may assume that if it comes down to it you can get by on Social Security alone.
This assumption may be mistaken. The average benefit changes regularly as Social Security recipients pass away and others begin to receive benefits, but at the present time it stands at $1,082 per month according to the Associated Press.
The majority of people receiving Social Security rely on it as their primary source of income. In fact, if you drill down further you find that approximately 33% of Social Security recipients say that their benefit accounts for at least 90% of their income. When you consider the average benefit stated above you can see that a lot of people are finding themselves in a difficult financial position during the latter portion of their lives.
Social Security recipients did receive a bit of good news recently when it was announced that there will be a cost-of-living adjustment for the first time since 2008. Social Security cost-of-living adjustments are tied to the rate of inflation. When 2012 rolls around Social Security recipients will see a 3.6% increase in their checks. Although this may be considered good news for many seniors, this increase boils down to only about $39 per month.
Out-of-pocket health care costs for senior citizens have risen by just over 14% since the last time there was a Social Security cost-of-living adjustment. So the truth is things are getting tougher for those who rely heavily on entitlement programs to cover their living expenses and health care costs.
If you are looking forward to your retirement years, it is clear you will have to be proactive about taking control of your own financial destiny. The wise first step is to develop a cogent plan for the future with the assistance of an experienced, savvy retirement planning attorney.
Author, President and Founding Attorney
Parman & Easterday