How to boost your retirement when social security only covers 40%
A big misconception about Social Security is that it will provide you with enough money to live on. In reality, if you are an average wage earner, Social Security will only replace about 40% of your current salary.
Since most seniors need a lot more money than that to live comfortably, you’ll obviously need a back-up plan if you want to get the most out of your retirement and avoid financial worries throughout. -this. Here are some steps you can take to generate more retirement income and supplement the benefits you receive from Social Security.
1. Maximize your IRA or 401 (k)
Saving for retirement on your own is a great way to build enough budget for your retirement years. It pays to maximize your IRA or 401 (k) plan throughout your career, or get as close as possible to the maximum possible.
Currently, IRAs reach a high of $ 6,000 per year for savers under 50, while 401 (k) reach a high of $ 19,500 much more generous for savers under 50. years. Maximizing a 401 (k) is much more difficult than contributing the maximum to an IRA, but if you have a 401 (k) you should, at the very least, make sure you put in enough money to hook your full employer. .
In addition, if you are 50 or over, you have the option of making catch-up contributions to your pension plan. These are worth $ 1,000 for an IRA and $ 6,500 for a 401 (k).
2. Prepare to work part-time in retirement
Working to a certain extent during retirement will not only increase your cash flow. It will also give you something to do with your time that won’t require you to spend money.
If you are nearing retirement age, start thinking about what kind of work you might want to do as a senior. If you think you’ll enjoy consulting in your current field, start networking and testing to build a client base. And if you think you’d rather start a more creative business, start making those plans, too.
3. Secure a flow of rental income
It takes money to buy investment property, but if you have it, you could be successful in building a solid rental income that not only covers your mortgage and maintenance costs, but also leaves you with a lot of money. extra money. . Additionally, home values have the potential to increase over time, so if you buy an income property in your 50s before retirement, by the time you reach your 70s, you may be able to unload it with a good profit.
Social Security could end up providing you with a good income, and if you delay your deposit beyond full retirement age, you can actually increase your benefits in the process, to the point where they replace more than 40% of your old paycheck. But even so, it is advantageous to align some income outside of social security. That way, you’ll have extra cash to not only pay your bills, but also enjoy the freedom that comes with leaving the workforce behind.