The annual report from Social Security is in and… it isn’t good.
Social Security, according to the report, is indispensable for the middle class. It provides at least half the income for 64% of the retired. And it has become as important for the middle class as the less affluent; a point that is often overlooked when its future is being discussed.
Eighty-seven percent of married couples and 85% of non-married persons aged 65 or older received Social Security benefits. It is a major source of income (providing at least 50% of total income) for 52% of aged beneficiary couples and 74% of aged non-married beneficiaries.
And it is 90% or more of income for 22% of retired couples.
According to the report, a high proportion of certain population groups (35% on average) rely on Social Security for 90% or more of their income.
Keep in mind the average monthly check is somewhere around $1,200. If that’s 90% of your income or even half, you aren’t going out much.
If the average monthly check is around $1,200 and you don’t have a funded retirement strategy to fill in the gaps, get accustomed to living at or near the poverty level.
The stunning part of the report was that assets from plans like 401(k)s and IRAs are actually paying less now than in 1962: 11% now vs. 15% then.
There are more than 56 million Americans who currently receive Social Security benefits. Sixty-five percent are retired workers, 20% are survivors or spouses and children of retired and disabled workers, and 15% are disabled workers.
Fifty-six million, and the majority of baby boomers, have yet to arrive in the system. And the average Social Security recipient has paid in only about three years’ worth of benefits.
The increased taxes and decreased benefits that will be essential to keep the program afloat are going to be paid by people who earn higher incomes or those not yet old enough to receive benefits. And increased Social Security taxes are unavoidable.
And, despite the new taxes, most recipients will still be at or below the poverty level.
Based on the current numbers, I wouldn’t bank too much on Social Security.
If you haven’t reviewed your retirement plan lately, now is the time. Make sure it is fully funded and you have your ducks in a row.
P.S. My friend and colleague Marc Lichtenfeld recently shared the very best way to speed up your retirement savings with very little downside risk.
In fact, it’s as easy as buying common, big-name stocks… but can be from six to 21 times more lucrative. And it doesn’t involve any complicated or risky options strategies. It’s actually as low maintenance as it gets!
I highly suggest you take a few minutes to watch Marc’s latest presentation.