If you retire in 2020 at age 65 and 9 months earning $30,000 per year when you retire, your monthly Social Security benefit will be about $1,067.00 or $12,804, a replacement of 43% of pre-retirement income. A couple would receive $19,206, an amount above poverty.
If you earn $45,000, your Social Security monthly benefit would be about $1,271.00 or $15,252, (couples income $22,878) a 34% income replacement.
Now, if a couple is living paycheck to paycheck on $30,000, how in hell do they expect to be as well off trying to live on $19,206, just above the poverty level? If you barely get buy on 100% of your income how will you do on less than half?
An individual income of $12,490 is living in poverty (not counting benefits from safety net programs).
The chances of Social Security replacing 100% of income in your lifetime are slim to none. Even if any of the current proposals to improve SS benefits are adopted, benefits will not reach 50% income replacement for the $30,000 income level.
So, there is a lesson, a strong lesson. You need to prepare regardless of what you earn.
- Be prepared to work longer
- Find a way to put aside money on your own, even a modest amount that will generate some additional income in retirement; a part-time job, making money from a hobby, working OT if you can, anything just about
- Watch your spending. Virtually everyone can occasionally find some unnecessary spending that can be saved. If you want some tips, check out my article on HUMBLEDOLLAR.