The latest news about Social Security has alarm bells ringing among citizens and more and more people are wondering if they can rely on Social Security in their retirement… We are getting closer to the financial breaking point, and while the program is not in danger of disappearing completely, it is more than possible that benefits will be cut so that the program can continue. This is because Social Security gets most of its funding from payroll taxes, but with baby boomers (those born between 50 and 60) leaving the labour market, the source of income is plummeting. And, reports warn that by 2035 we could run out of trust funds and reduce pensions… Is it time to have a plan B?
Time to have a backup or plan B
As our grandmothers would say, prevention is better than cure, and experts recommend that we start saving now (although in the past cuts have been avoided through political reforms, but we have no guarantee that this will happen again).
So, following the advice of the experts, who until now had recommended saving 15 or 20% of our income, increasing our savings to 25% or more does not mean that we have to save our entire salary and live in the shadows, but it does require certain sacrifices such as avoiding unnecessary expenses or working overtime, but it will be something we will be thankful for in a few years.
Increase your retirement savings
As we said, we have to make sacrifices in other areas of our lives and cut out those small expenses that in the long run become many monthly expenses. We are going to give you some tips so that, regardless of your age, you can start saving!
- Start little by little, save what you can afford. If your salary allows you to save $200 a month, do it, if it allows you to reduce $50, then $50. It is not about stopping doing things or living poorly to save for retirement (because you may not even make it)
- Reduce unnecessary expenses.
- Invest in retirement plans such as 401(k), IRA, or other plans that generate long-term returns.
Are there bonuses for retirees?
There are no bonuses as such, but for taxpayers who decide to delay their retirement age, the Administration will “reward” them with a % plus the amount of money they receive when they retire (remember that the current age is now 66.8 years for those born in 1959 and 67 years for those born in later years), and yes, by delaying the retirement age we mean reaching the age of 70 by working and paying contributions to the Administration.
Perhaps not everyone is prepared to extend their working life, so we recommend that you start saving now, regardless of your age, first in case Social Security benefits do not arrive when it is our turn, and second because, if they do arrive, they could decrease by even more than 20%.
And if i am already retired, what can i do?
And if you are already retired, you have nothing to worry about, you just have to keep in mind that the amount you receive may be less in a few years, so it would be best to also start cutting back on spending and leave a monetary survival kit with which you can respond to unforeseen events (both personal and health-related) without going bankrupt.
Remember that planning now will mean breathing easy in a few years! Future is already here and we have nothing guaranteed… It is better to save now than regret it later, start saving for your future now!