STATES CHRONICLE – If you’re approaching retirement or maybe you just like to think ahead, here are some things to know about retirement and social security.
Retirement plans need to be very well thought through as you have to make sure you have everything you need in this time of your life. You should think about how much money you need each year for house expenses, bills, food, clothing and so on. Basically, the first things to think about are the bare necessities.
Next, you should think about whether the bare necessities will be enough in your years of retirement. You might want more. Maybe you’d like to buy a house in the countryside, or have a farm. Or maybe you’ll want to travel and see the world. Or maybe you want to spend at least one week in Las Vegas a year. In this case, you have to make some calculations and see how much money you need to make your retirement dreams come true.
You’ll have your own savings which you should make sure to split equally between years. You can’t just start spending money and 5 years into your retirement to realize there’s nothing left. If we consider retirement savings worth about $500,000 and the fact that you could easily have a longer lifespan, you should probably split your savings into about $15,000 to $25,000 a year.
If that doesn’t seem like enough, don’t forget you will also receive money from Social Security. The amount depends on your annual earnings as well as on how long you wait until you start collecting your money. For a salary of $75,000 a year you could receive about $15,000 to $20,000 from Social Security annually. Added to your savings, you will have $30,000 to $40,000 a year.
To get a sense of whether such an amount of yearly income would be enough, you can make a comparison to your current annual earnings and expenses. Although if we consider an annual income of $75,000, which is double compared to retirement income, you shouldn’t worry about not having enough money. Most of you current expenses will reduce or even disappear, so $30 – $40 thousand should be enough.
If you retire later, your Social Security income will increase with about 8% for each year of delay, which will bring you instead of no more than $20,000, about at least $25,000.
There are many online tools that can help you calculate your retirement income based on your savings, you annual earnings and inflation so you could get a pretty accurate estimation of how your retirement bank account will look.
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