Bob Powell, Editor of Retirement Daily, explains how you can make your Social Security check last longer.
Transcript:
Bob Powell: For folks who are living on social security and are have just received their cost of living adjustment and they’re wondering how they’re going to get by in a world where inflation and egg prices and whatnot are on the rise. The key thing is always to go back and look at your expenses and to look at what are your essential expenses and what are your discretionary expenses. And if there’s any room in the budget to cut back on your discretionary expenses, that would be the first order of business. The next thing is to look at your essential expenses and what are the things that you can cut. Maybe it’s your heating bill and maybe it’s lowering the temperature in your house by a degree or two. Maybe it’s looking at things like auto insurance and increasing the deductible that you might have. So look for little ways that you can sort of reduce your expenses so that at least the the limited increase in your social security benefit can go a little bit farther than it might have if you just left all your expenses unreviewed.
So when I think about the social security trust fund becoming depleted in 2033, there’s the potential for a 21% cut in your benefit across the board. And one of the ways that you can plan for this is a couple of ways. One is to sort of look at your current living expenses and your current sources of income, and to say, how can I get by on 20% less than what I’m receiving now from social security? The other is to create a worst case scenario. If you’re young, for instance, there’s a possibility that you might not face a potential benefit cut, you might face higher taxes and a benefit cut. So I think for many folks who are in their say, 20s, 30s and 40s, you need to think about planning for social security as if it will be there in full or if it will not be there at all. And my advice would be if you’re in your 20s, 30s, 40s and even your 50s is to the plan for social security to not be there at all, and to rely more on your own personal savings to fund your retirement. It’s impossible to predict the future, obviously, but one of the things that you want to do is to create scenarios best case, probable case, worst case scenarios, and work around those as you think about potential benefit cuts to social security.
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