The Most Important Retirement Chart You’ve Ever Seen | Smart Change: Personal Finances

(James Brumley)

Will he or won’t he? That’s the question investors and workers of all ages are increasingly asking about US Social Security program payments these days. Will this be enough to fully supplement my retirement needs? Indeed, given discussions on its sustainability, will SSA even be able to make payments as promised?

The answer, of course, depends on how much you’ll need in retirement and how much you save while you’re still working. At the very least, though, it’s good to have a rough idea of ​​what to expect then.

To that end, here’s a visual breakdown of the number of people who receive each month from the nation’s Social Security Administration. Chances are good that you will end up somewhere around the middle of the average, for better or for worse.

Here’s how much the Social Security folks collect

The average monthly Social Security payment for a retiree in 2022 is $1,657. But the fun thing about averages is that they can hide a lot of extreme data. Many people receive much, much less than this amount, and a few lucky ducks collect much more. Many personal factors go into determining your particular monthly payment, such as how long you work, how much you earn, and the age at which you retire. So while this number is enough to start building a financial plan, it’s hardly a number you can afford to set in stone.

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The table below really puts things into perspective. While the average monthly check is worth $1,657, about 20% of program participants will receive less than $1,000 per month, and there is a large group of people who bring in around $1,000 each month. Half will receive less than $1,600.

Data source: United States Social Security Administration. Table by author.

And the SSA is not as fruitful for high earners as some people might hope. Only about 4% of Social Security recipients collect more than $3,000 in monthly benefits. According to data from the Social Security Administration.

Simply put, assuming you make average money, there’s about a 50% chance that your monthly Social Security retirement benefit check will only be $1,000 (in today’s dollars ) and no more than $2,000 per month. There’s only a 30% chance it’s bigger than that, because it takes a constant income (again, in today’s dollars) of around $6,000 a month or more to reach this level of payment.

You can easily do more if you plan

It’s enough to survive, to be fair. For someone planning to travel in retirement or looking to leave a nest egg for their children, this limited income level presents challenges. Most people will want more.

Image source: Getty Images.

The good news is that this “more” is certainly possible even by earning a modest salary in the meantime. The key is to always save something now, no matter how small the amount may seem. Even investing just $100 a month in a S&P500 an index fund and earning an average of 8% per year can achieve a reserve of about $135,000 over a 30-year period. Investing that kind of nest egg in good, dividend-paying stocks later in life could supplement your monthly Social Security benefit by several hundred dollars, making the difference between a difficult retirement and a comfortable retirement.

And for the record, while earning more increases the size of your Social Security check, the chart above also suggests that there’s a law of diminishing returns at play here. That is, even if you don’t lose money by earning more, your Social Security boost decreases as you earn, and the further boost stops completely once your income exceeds the cap. of $147,000 this year. Therefore, the closer you get to this mark, the more important it is to invest for growth on your own if you want to maintain your current standard of living.

The $18,984 Social Security premium that most retirees completely overlook

If you’re like most Americans, you’re a few years (or more) behind on your retirement savings. But a handful of little-known “Social Security secrets” could help boost your retirement income. For example: a simple trick could earn you up to $18,984 more…every year! Once you learn how to maximize your Social Security benefits, we believe you can retire confidently with the peace of mind we all seek. Just click here to find out how to learn more about these strategies.

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