Personal Finance

Could You Live on $16,848 a Year?

Your Social Security benefit may not be enough for you to live on in retirement.

It doesn't seem like a lot, but it is the average annual Social Security benefit for all retired workers in 2018. Could you get by on this amount?

Sure, some expenses could be lower once you retire -- your mortgage may be paid off, your children may be financially independent, and you won't have work-related expenses. However, other expenses, such as new hobbies or additional travel, may take their place. And you should anticipate that certain expenses, such as health care, will be more costly as you age. Also, don't forget the potential for inflation and its impact on the cost of food, utilities, and other goods and services.

Social Security Is Only a Safety Net

The reality is that it may not be wise to count only on Social Security. If you want a better quality of life in retirement, you have to take responsibility now and focus on building your own retirement savings. You can use the savings you accumulate while you are working to help make up the difference between what Social Security may provide and what you'll need to live comfortably when you retire.

Harness the Power of Compounding

Contributing to your employer-provided retirement plan is an important first step, but it can also be important to keep increasing the amount you contribute over time. The more you put into your plan, the greater your potential retirement income. Long-term compounding may turn even a small contribution increase into a higher plan balance at retirement.

Facts About Social Security

  • 8% - The amount your benefit grows per year for each year you put off enrolling after full retirement age (up to age 70)
  • 2.8 - The number of current workers for each Social Security beneficiary
  • 95% - Percentage of working Americans between age 20 and 49 who have survivors insurance protection for their spouse and children through Social Security
  • 89% - Percentage of workers who are protected in the event of a long-term disability by Social Security
  • 6.2% - Social Security payroll tax on earnings up to $128,400 in 2018 (the employee and the employer each pay this tax)
Source: Social Security Administration, 2018

Required Attribution

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© 2018 DST Systems, Inc.

Janney Montgomery Scott LLC Financial Advisors are available to discuss the suitability and risks involved with various products and strategies presented. We will be happy to provide a prospectus, when available, and other information upon request. Please note that the information provided includes reference to concepts that have legal, accounting and tax implications. It is not to be construed as legal, accounting or tax advice, and is provided as general information to you to assist in understanding the issues discussed. Neither Janney Montgomery Scott LLC nor its Financial Advisors (in their capacity as Financial Advisors) give tax, legal, or accounting advice. We would urge you to consult with your own attorney and/or accountant regarding the application of the information contained in this letter to the facts and circumstances of your particular situation.

Janney Montgomery Scott LLC, is a full-service investment firm that is a member of the NYSE, the FINRA and SIPC.

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