Social Security is meant to replace about 40% of the average person’s income after retirement, but this amount varies from person to person. Many people wonder if it’s possible to live solely on Social Security. The reality is that relying only on Social Security can be challenging, especially with the rising cost of living and medical expenses.
Certified Financial Planner® Matt Frankel discusses this topic in detail, explaining how different factors impact the benefits you receive. While some retirees may find ways to stretch their Social Security payments, others may struggle to cover essential expenses like housing, healthcare, and daily necessities.
Social Security benefits are calculated based on your lifetime earnings, and the amount you receive depends on how much you paid into the system during your working years. For most people, these benefits alone are not enough to maintain their pre-retirement lifestyle. Additional savings, pensions, or other sources of income are often necessary to ensure financial stability.
Many retirees are unaware of certain strategies that can help them increase their Social Security payments. By making smart decisions about when to start claiming benefits, you could potentially receive a significantly higher monthly payment. Delaying your benefits until full retirement age or beyond can lead to a larger payout, providing you with more financial security in the long run.
One important factor to consider is the cost-of-living adjustments (COLA) applied to Social Security benefits. These adjustments are designed to help retirees keep up with inflation, but they may not always be enough to cover rising expenses. Healthcare costs, in particular, continue to increase, making it even more important for retirees to have additional savings or financial plans in place.
For those who are behind on retirement savings, there are still ways to improve their financial situation. Exploring part-time work, downsizing to a more affordable home, or adjusting spending habits can help make Social Security benefits stretch further. Additionally, understanding little-known Social Security strategies could potentially add thousands of dollars to your annual income.
For example, one simple strategy could increase your Social Security payments by as much as $22,924 per year. Many retirees overlook these opportunities, missing out on extra income that could make a big difference in their quality of life. Learning about these benefits and how to maximize them can give retirees more confidence and peace of mind as they navigate their financial future.
Stock prices used in this discussion were based on the morning prices of Jan. 27, 2025. The video discussing this topic was published on Jan. 28, 2025.
If you want to learn more about how to maximize your Social Security benefits and secure a better retirement, click here to discover strategies that could make a difference.
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