Experts in the field of personal finance have been telling their clients for years to factor in life without Social Security.
Those who do not use a retirement planner or have been unable to save significantly for retirement may wish to reevaluate their plans.
Social Security Cuts Affect Retirement Planning
If you earn a median salary of $35,000 like the average American, how much more will you need to contribute to your retirement to make up for Social Security cuts? For the calculations, the current age of full retirement, 67, was assumed, although this may change in the future.
Anyone retiring between 2033 and 2073 would receive $1,285 per month in benefits if Congress does not intervene and benefits are not reduced.
If reductions were implemented, this amount would fall to $1,028, or $12,336 annually.
After determining this amount, the GOBankingRates retirement calculator was used to determine how much more you would need for retirement savings if you are 10 to 50 years away from retirement. Based on Vanguard data, the calculations utilized the median savings amount for different age groups.
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How Social Security Cuts Impact Retirement Savings Goals
The GOBankingRates retirement calculator reveals that a person with a median income of $35,000 who wishes to maintain the same income in retirement must save $611,848.
If benefits are reduced by 20%, this figure increases to $616,512.
To perform your own calculations based on your salary, savings, and investments, you must first determine your Social Security retirement benefit.
Visit the Social Security Quick Calculator and enter your projected retirement date and earnings.
Use the GOBankingRates Retirement Savings Calculator to determine how much more you will need to save for retirement as a result of Social Security cuts. The greater your current salary, the greater your Social Security benefits will be in the future. Consequently, the 20% reduction will have a greater effect on your retirement plans.
Moreover, it is evident from our data that the earlier you begin saving for retirement, the less impact the 20% reduction will have, as you will have other sources of income.
If your data indicates a projected shortfall, you should speak with an investment advisor who can help you generate the necessary retirement income.