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Retirement for dummies usa

 
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amother




OP
 

Post Fri, Jan 14 2022, 9:42 am
I'm really clueless in these aspects...pls explain this to me

Why do people have retirement funds if we save each month for ss.?
Don't u live off that when u retire?
I pay alot of ss each month
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chanatron1000




 
 
 
 

Post Fri, Jan 14 2022, 9:44 am
Social Security isn't enough.
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amother




Butterscotch
 

Post Fri, Jan 14 2022, 9:44 am
amother [ OP ] wrote:
I'm really clueless in these aspects...pls explain this to me

Why do people have retirement funds if we save each month for ss.?
Don't u live off that when u retire?
I pay alot of ss each month


Because it's max 40k a year.
Can you live off that?
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SixOfWands




 
 
 
 

Post Fri, Jan 14 2022, 10:19 am
chanatron1000 wrote:
Social Security isn't enough.


^^^^

Social security provides very minimal funds. Its about $3300 a month. My dad, may he live to be 120, mostly lives off it, but he doesn't exactly live the high life. Not that he ever did. He doesn't keep kosher, mostly shops at Aldi, doesn't travel or buy new things. When he needs something as small as a toaster oven, he usually asks us.

Most of us don't want to live that way.
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amother




Blueberry
 

Post Fri, Jan 14 2022, 10:23 am
Also, because of regular inflation, if you start saving for retirement at, say, 30, whatever amount might seem reasonable now will be worth less in 35 years.
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doctorima




 
 
 
 

Post Fri, Jan 14 2022, 10:46 am
I believe there's a government SS website where you can look up how much you'll be getting annually in retirement. It's always good to be informed, but you may be shocked and disappointed. Definitely not likely to be enough to maintain your current standard of living all by itself. Hence the need for additional retirement planning.
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amother




OP
 

Post Fri, Jan 14 2022, 10:54 am
[quote="amother [ Butterscotch ]"]Because it's max 40k a year.
Can you live off that?[/quote
Thankseveryoneforexplainingthis
40 k is alot!!
I'm happy to hear that, how do I know if I will actually make that amount?
Does it depend on your income now?
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amother




OP
 

Post Fri, Jan 14 2022, 10:54 am
Also when do u start getting ss, what age
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amother




Slateblue
 

Post Fri, Jan 14 2022, 10:58 am
As others have posted, SS payments aren't enough to support most people unless they have very low expenses in retirement.

Also maximum SS security payments are based on having earned a high salary for at least 35 years and retiring at 70. Some people don't want to work that long or physically are unable to. A lawyer or a college professor can probably work until they are 70 but many people would not be able to.

Also expense don't magically decrease significantly when one retires. Calculate your current living expenses and see how much it would take to support yourself and whether you would have to change your life style to live on SS.

Keep in mind that certain expenses like medical will probably get higher since you need a Medigap policy and even prescription drugs generally have a co-payment. My medical expenses for Medigap and my drug plan is about $3000 per year and that is in addition to the standard $170 per month for Medicare which is deducted from my SS monthly payment. I am not complaining because I have ample retirement assets and Medicare coverage is fantastic - no deductible; no co-payment and every medical facility and doctor accepts it and I am fully covered anywhere in the US.

It also doesn't factor in retirement expenses like being able to hire a home care attendant if one needs one after an operation or when recovering from an illness.

There is a huge difference in peace of mind between attempting to live on SS and having additional retirement income which reflects the actual cost of what it takes to live comfortably when retired.

The most an individual who files a claim for Social Security retirement benefits in 2022 can receive per month is the following but most people get far less. I worked at fairly well paying jobs for many years - well over 35 and my monthly benefit is about $1800 which wouldn't cover my housing expenses.

Here are the maximum monthly payments

$2,364 for someone who files at 62.
$3,345 for someone who files at full retirement age (66 and 2 months for people born in 1955, 66 and 4 months for people born in 1956).
$4,194 for someone who files at age 70.
(For context, the estimated average Social Security retirement benefit in 2022 is $1,657 a month. The average disability benefit is $1,358.)

Who is eligible for the maximum benefit? People whose earnings equaled or exceeded Social Security’s maximum taxable income — the amount of your earnings on which you pay Social Security taxes — for at least 35 years of their working lives. The maximum taxable income in 2022 is $147,000. The figure is adjusted annually based on changes in national wage levels, and thus the maximum benefit changes each year.
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nicole81




 
 
 
 

Post Fri, Jan 14 2022, 11:04 am
Aside from what other people have mentioned about it not being enough (40k is not a lot and I don't know your age, but in another 20-30 years it can have the same value as 20k now) many of us would like to retire younger. I put more away now, and since I was about 25, so I could iyh retire at 55 if I'd like.
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amother




OP
 

Post Fri, Jan 14 2022, 11:09 am
Ty for explaining

So I make 20k now, I definitely won't get maximum ss benefits...
I'm starting to save 50 $ per month to 403k .
I'm 32

Trying to see what else I can do
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amother




Slateblue
 

Post Fri, Jan 14 2022, 11:14 am
amother [ OP ] wrote:
Ty for explaining

So I make 20k now, I definitely won't get maximum ss benefits...
I'm starting to save 50 $ per month to 403k .
I'm 32

Trying to see what else I can do


Your FICA payments including payments for both SS and Medicare.

Don't forget that your employer is making a contribution that is equal to your payments so you are really benefitting economically.

Also since you earn a relatively low wage, you are much more likely to get back more in value - especially in terms of Medicare - than what you contribute because there are also minimum amounts.
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