Recent news about Social Security has raised concerns among citizens regarding their ability to rely on it during retirement. We are approaching the financial breaking point, and while the program is not in danger of disappearing entirely, benefits may be reduced in order for it to continue.
This is because Social Security receives the majority of its funding from payroll taxes, but as baby boomers (those born between 50 and 60) leave the labor force, the source of income is dwindling. Reports indicate that by 2035, trust funds may be depleted, leading to reduced pensions. Is it time to think of a backup plan?
Time to have a backup or plan B
As our grandmothers would say, prevention is better than cure, and experts advise us to begin saving immediately (although cuts have previously been avoided through political reforms, there is no guarantee that this will happen again).
So, following the advice of experts who previously recommended saving 15 or 20% of our income, increasing our savings to 25% or more does not imply that we must save our entire salary and live in the shadows, but it does necessitate certain sacrifices such as avoiding unnecessary expenses or working overtime, which we will be grateful for in a few years.
Increase your retirement savings
As previously stated, we must make sacrifices in other areas of our lives and eliminate small expenses that accumulate over time to become large monthly expenses. We’ll give you some pointers so that you can start saving, regardless of your age!
- 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, but if taxpayers choose to delay their retirement age, the Administration will “reward” them with a percentage 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 later), and by delaying the retirement age, we mean reaching the age of 70 by working and paying contributions to the Administration.
Perhaps not everyone is ready to extend their working life, so we recommend that you begin saving now, regardless of age, first in case Social Security benefits do not arrive when it is our turn, and second, because if they do arrive, they may be reduced by 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; however, keep in mind that the amount you receive may be reduced in a few years, so it is best to begin cutting back on spending and saving 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 make breathing easier in a few years! The future has arrived, but nothing is guaranteed. It is better to save now than regret later; begin saving for your future today!