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Can I Retire On Social Security Alone

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ð´Ways to Help You Retire on Social Security Alone

Cost is only one reason to choose where to live in retirement. You may want to stay close to children and grandchildren. Strong friendships or community ties might also keep you in a certain location, even if where you live is no longer tied to a job.

Quality healthcare, good options for active lifestyles, and a pleasant climate are other factors to consider when you decide where to retire. If relocation is an option for this new chapter of your life, take comfort knowing that many U,S, cities offer a quality lifestyle that you can afford.

Whoever Came Up With The Crazy Idea That We Need $1 Million To Retire

The advice from many retirement financial experts is pretty clear. To have a reasonably comfortable life in retirement, you need about $1 million saved. Thats the traditional guideline originated by financial planner, Bill Bengen, back in 1994, and one thats still embraced today.

But, lets face it, most people simply dont have anything close to a million dollars for retirement.

Eliminate Debt Before You Retire

Whats your biggest debt? For many of us, its a mortgage. In some cases it can be smarter not to pay off a mortgage early. Retirement is not typically one of those cases, though.

In fact, we identified seven situations when its smart to pay off the mortgage. Retiring you guessed it is one. When your income is fixed and you dont have much coming in each month, paring back housing costs buys precious financial slack. That goes double if Social Security will be most of your income.

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Looking At Social Security Payments

To understand how much of your income Social Security might replace, consider how the benefits get calculated. First, you’ll need to have worked at least 10 years to qualify at all. The SSA will then look at the 35 years during which you had your highest earnings and apply a formula to determine your potential payment at full retirement, which is between age 66 and 67, depending on your birth year.

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You can retire as young as 62, but this means seeing your monthly benefits cut anywhere from 25 to 30 percent. Retiring as late as 70, however, means you can get an increase in your benefits by up to 8 percent each year. Cost-of-living adjustments will also apply annually and add to the amount you receive in Social Security payments by direct deposit or debit card.

To learn more about your potential benefits based on your lifetime earnings record, you can get a “my Social Security” account through the SSA website. This will require providing your Social Security number and other identifying details. You’ll also be able to access a retirement estimator that will let you account for potential earnings changes and adjustments. You can use the calculator to estimate your spouse’s benefits too.

Social Security And Us Expats Living Abroad

Can you Retire on Social Security Alone (Josh

One of the biggest questions most people have when they look at retirement is whether they can afford it. Retirement on Social Security alone can be a nerve-wracking possibility in many parts of the US. It is a concern shared by the one in three Americans who have no additional retirement savings. However, if you are retiring overseas, chances are good that not only can you afford to retire, you can afford a better standard of living than you might enjoy back home. There are a few concerns to look at before making a commitment and a few things that you may not know about your Social Security rights.

Read Also: How Are Social Security Benefits Determined

Sponsored: Add $17 Million To Your Retirement

A recent Vanguard study revealed a self-managed $500,000 investment grows into an average $1.7 million in 25 years. But under the care of a pro, the average is $3.4 million. Thats an extra $1.7 million!

Maybe thats why the wealthy use investment pros and why you should too. How? With SmartAssets free financial adviser matching tool. In five minutes youll have up to three qualified local pros, each legally required to act in your best interests. Most offer free first consultations. What have you got to lose?

How Is Cost Of Living Calculated

Affordability is based on many factors. One measure is the cost of living.

The Council for Community and Economic Research publishes its Cost of Living Index each quarter. It measures regional differences in the costs of consumer goods and services for professional and managerial households in the top income quintile. The composite index is based on six categories:

  • Housing
  • Health care
  • Miscellaneous goods and services

The index is one way to find affordable cities in which to live. Not all of the cities listed here are on C2ERs list. The housing prices used in each section are based on data from the U.S. Census Bureaus 2019 figures.

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How Much Will I Have To Work With

Social Security is based on work credits. Depending on how much either you or your spouse earned during your working years, you will receive monthly benefit checks or direct deposits. The amount of retirement income will also depend on the age at which you first begin receiving Social Security checks. You are eligible for early retirement payments when you turn 62. However, every month you work after your 62nd birthday increases the number of payments that you will be eligible for. Since expected lifespans have increased since the time the program was introduced, the decision about when you apply will have ramifications for years or decades. The age at which you reach full retirement age depends on when you were born. If you were born in 1954 or earlier, that age is 66. People younger than that have a few months added for each year of age, up to age 67 for those born in 1960 or later.

You can find out exactly how much you will have to work with by looking at your My Social Security account. Theyll create a personalized estimate based on your past income and your expected income between now and your expected retirement age.

The average individual who works to full retirement receives around $1,389 per month. If you are married to someone also receiving that average amount, you will have around $32,000 per year to work with.

What Can That Amount Get Me

Can I Retire In Italy On My Social Security Alone?

What you can expect will depend on where you retire. In a place like London, for instance, youll find that your retirement income is not sufficient for a comfortable lifestyle. However, if you look at areas with a lower cost of living, you will have more than enough. Many parts of Asia, for instance, have rent prices that are only a few hundred dollars a month for a two bedroom flat. Your income will cover this and perhaps also extras like household help.

You can compare a number of cities and countries using an online calculator like the one at Numbeo. This will show you average expenses and help you make an informed decision.

If you are interested in establishing residency in another country, you should also look at any income requirements. Luckily, the average Social Security income is adequate in most places to begin establishing permanent residency and the benefits that provide.

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Estimating Future Living Costs

Once you’ve looked at your benefit estimates, you can identify and add up all the living costs you expect during retirement and see how far your Social Security benefits will get you. Some of the basics include housing, food, utilities and clothing. However, you’ll want to include many other items such as transportation, debt payments, health care costs, insurance, recreational activities, hobbies, personal care needs and miscellaneous expenses.

You’ll also want to consider any major purchases you might want to make such as paying for your grandchildren’s college or buying a vacation property. Also, inflation will factor in and lead to higher costs after retirement.

Consider also: The Average Cost of Retirement

Tips To Retire Comfortably On Social Security Alone

So, your retirement plan is to live on your Social Security benefits? It might work. Much depends on the size of your checks and your lifestyle.

Bear in mind, though, that few people get rich off this program. The average monthly benefit among retired workers is about $1,500.

If you are counting on those benefit checks to cover all your expenses in retirement, its never too early to start planning how youll make it work. These ideas and tips can help.

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Social Security Administration Estimates That Many People Live On Mostly Benefits

The Social Security Administration estimates that of the over 46 million Americans receiving Social Security retirement benefits

  • 21% of married couples and 45% of single persons rely on Social Security for 90% or more of their income.
  • And, 50% of married couples and 70% of unmarried persons receive 50% or more of their income from Social Security.

Hint: It’s A Pretty Small Number

3 Steps to Retiring Comfortably on Social Security Alone in 2020 ...

Social Security gets a lot of criticism, when in reality, it serves as a lifeline for millions of retired Americans. But if there’s one thing you should know about Social Security, it’s that those benefits are not designed to sustain you in retirement by themselves.

If you’re an average earner, you can expect Social Security to replace about 40% of your preretirement income. If you’re a higher earner, it will replace an even smaller percentage, since there’s a maximum benefit that applies across the board.

Most seniors, however, need a lot more than 40% of their former earnings to keep up with their expenses and maintain a decent quality of life. Now, some financial experts will tell you that retirees should aim for 70% to 80% of their previous wages to live reasonably well. Others will insist on 90%, while some will say that you can get away with 50% if you’re really willing to live frugally.

Now, if $18,000 and change sounds like enough retirement income for you, then congratulations — you don’t need to worry about your nest egg. But if that sounds like a financial struggle in the making, then you’d be wise to ramp up on the savings front while you still can.

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Retire Debt Before You Retire

Before retirement arrives, the less debt you have the better. Paying off debt entirely isnt possible for everyone, but the less you owe the more youll pay out. This applies to credit cards as much as it does to your home and vehicle.

The NewRetirement Retirement Planner will let you see what happens to your finances with and without debt. It can be pretty interesting to model your own situation and experiment with different debt repayment plans.

Learn about the advantages of a debt-free retirement .

How Much Social Security Can You Expect

The Social Security Administration reported in 2017 that nearly nine out of ten U.S. citizens aged 65 and older received Social Security benefits or were expected to receive them.

How much you receive in Social Security payments will depend on a number of factors. They include your lifetime earnings and when you begin taking payments. The average Social Security payment to retired workers at the end of 2020 was $1,544.15 per month.

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Can You Retire Comfortably On Social Security Alone

What will retirement look like for those trying to live on just Social Security Benefits?

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There are people out there who can survive on Social Security alone. Maybe they have always been living on a small income. Perhaps they have paid off a home or have other ways to live frugally. For the rest of us, even the maximum Social Security check could make it tough to survive comfortably in most cities. If you are a high earner, you will likely struggle financially if you attempt to live on Social Security alone in retirement.

It is not that surprising to me that more than a quarter of people aged 50 and older think that they can live comfortably on Social Security alone once they enter retirement. This is according to a survey from Nationwide Insurance. This misperception could lead to disastrous results for their standard of living in retirement.

Was Social Security Meant to Fully Fund Your Retirement?

In case you were wondering, Social Security was never meant to be the only source of income for people in retirement. For much of this valuable benefit’s history, many workers also had a pension. Likewise, people used to not live as long. They also had more moderate standards of living and medical costs, in retirement, were not so outrageous.

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Can You Retire on Social Security Alone? (Josh’s Best Tips)

        David J. Rubin is a fact checker for The Balance with more than 30 years in editing and publishing. The majority of his experience lies within the legal and financial spaces. At legal publisher Matthew Bender & Co./LexisNexis, he was a manager of R& D, programmer analyst, and senior copy editor.

        We remember many phrases uttered by Franklin Roosevelt, such as, The only thing we have to fear is fear itself, and, A date which will live in infamy. Alas, most of us have forgotten the FDR pronouncement most relevant to our lives.

        Upon signing the Social Security Act into law in 1935, Roosevelt said:

        None of the sums of money paid out to individuals in assistance or in insurance will spell anything approaching abundance. But they will furnish that minimum necessity to keep a foothold…

        More than 80 years later, thats still the case. Yet in 2020, Social Security provided 21% of married retirees and 45% of unmarried beneficiaries with 90% or more of their monthly income.

        These factors can wreak havoc on workers’ efforts to save for retirement. The chart below illustrates how low-income retirees depend on Social Security benefits for more than half of their retirement income, while retirees in the top income brackets have other sources of income.

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        Need To Increase Your Retirement Plan Contributions Here’s How

          Saving for retirement is an important thing . But let’s face it — it’s not always an easy or fun thing.

          To consistently fund a 401 or IRA, you’ll probably need to give something up. That something may be a nicer car, a much-needed vacation, or home maintenance you’d like to outsource.

          But the reality is that planning to retire on Social Security alone is a bad idea. Those benefits will only replace about 40% of your paycheck if you’re an average earner, and most seniors need more like 70% to 80% of their pre-retirement income to manage their expenses well.

          This especially holds true these days given the way inflation is soaring. In fact, many seniors who get all or most of their income from Social Security at present are struggling financially thanks to higher costs at the pump, the supermarket, and just about everywhere. But those with savings to tap are no doubt faring better.

          Best Places To Live On Only A Social Security Check

          Stretch your SS benefits with this roundup of the cheapest places to retire.

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          However, with an average monthly benefit of just over $1,400, Americas most expensive cities are far out of reach without another source of income. If you do have to rely on your Social Security benefits alone and still want to make the most of your golden years youll need to live somewhere affordable that wont compromise your quality of life.

          Thats why GOBankingRates compiled a list of the 20 best cities to live off of just Social Security. The study factored in the cost of living, livability and median rent and after comparing the 143 largest cities in the U.S. combined the scores to determine where you really can get by on just your Social Security benefit.

          Cost of Living Score: 79.9

          Livability Score: 68

          Average Rent: $719

          Lubbock is one of five Texas cities identified in the study as a good place to live just on Social Security. Its relatively low livability score and rent of more than $700 per month prevented it from moving up on the list.

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          The Quick Answer Yes But Whether You’d Want To Is A Different Story

          It’s important to build a retirement nest egg so you have income outside of Social Security to pay the bills. But not everyone is able to come into retirement with money set aside in a savings plan. And so some seniors inevitably wind up having to depend on Social Security as their sole income source.

          If you’re wondering whether it’s possible to get by only on Social Security, the answer is technically yes. But it’s probably a scenario you’d rather avoid if possible.

          Is There Any Way To Retire Comfortably On Social Security Alone

          9 Ways to Retire on Social Security Alone

            The tricky thing about retirement planning is that it’s hard to anticipate what your living costs will look like 15, 20, or 30 years down the line. Maybe you’ll end up spending $1,000 a month on healthcare due to rising costs and multiple medical issues. Or maybe you won’t even spend half that much.

            But while it’s difficult to estimate your retirement costs when that milestone is decades away, there are steps you can take to plan for your senior years, like socking money away in savings and establishing an income strategy. And part of the latter should include figuring out what role Social Security might play in your retirement.

            Now many seniors depend on Social Security for the bulk of their retirement income. Some even count on those benefits to pay all of their living costs once they stop working.

            It may be possible for you to get by on Social Security alone. But whether that makes for an enjoyable retirement is a different story.

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