There are those who go through life without planning for retirement because they think that everything is already in place. They expect to receive Social Security when they reach the age of eligibility, and they assume that Medicare will take care of their medical expenses.
The limitations of Medicare are a topic that we will explore on another day. Today let’s look at Social Security.
Is your Social Security benefit alone really going to provide a comfortable retirement? To answer this question the first thing you need to know is your anticipated benefit amount.
You can find out how much you can expect to receive by accessing your statement on the Social Security Administration website. Your benefit amount is based on your 35 highest earning years.
The most you can receive is $2533 a month in 2013. At the end of last year the average monthly benefit for retirees was $1262.
The average is certainly not going to get you far, and even the maximum is relatively modest. And, prices continually rise but the cost of living adjustments are minimal to say the least.
This year the Social Security cost-of-living adjustment was 1.7%. It was calculated by measuring inflation through the utilization of the Consumer Price Index for Urban Wage Earners and Clerical Workers.
A 2014 budget proposal has been released by the White House. The president’s proposed budget would revise the way that inflation is measured. A “chained CPI” would replace the Consumer Price Index for Urban Wage Earners and Clerical Workers, and this would reduce the amount of the incremental cost of living increases.
These facts are a bit sobering for those who have been expecting too much from Social Security. If you want to retire in comfort you would do well to devise a long-term financial plan with the assistance of a licensed retirement planning attorney.
Author, President and Founding Attorney
Parman & Easterday