With inflation climbing steadily, housing prices reaching impossible levels, and the cost of living ascending the ladder, the dollars one receives after retirement don’t seem to be covering it too well.
And if you end up realizing that your Social Security check isn’t covering as much as you think it should, it is because it has been designed in a particular way. This was first launched in 1935 to help supplement the retirement sum for Americans after the Great Depression. It was then designed to help the older generations retire with some dignity and to add extra income to retirement savings and company pensions that most of the retirees received.
Social Security Might Be Important Now- But What Happens When It Gets Insolvent?
In the modern day, Social Security is still quite the same, as it functions as a supplement to other forms of retirement savings, but it is never meant to be one’s sole source of income. While social security can always be complicated, there is a very important fact that one would need to know about. One needs to understand that Social Security alone can result in a 60% pay cut from one’s current savings. This is not really sustainable for most, as many experts have recommended replacing about 80% of one’s income through retirement living.
What seems to be worse is that Social Security is itself at risk of lowering the benefits that it provides to retirees in the year 2035, when the fund will end up being insolvent, and the benefits will be lowered by a projected rate of 22%. This implies that recipients will be receiving just 78% of the total promised benefits, which further reduces how much retirees will be depending on Social Security.