Worried about having enough retirement income? These steps can help you

When it comes to retirement income, most people are faced with an approaching question: how much money is enough?

While the answer to this question in black and white never, recent headlines about Social Security solvency could inject more fear into this dilemma.

Last week, the Social Security Administration released its annual pattern report. Its new projections increased the date on which the fund that pays retirement benefits would run out by 2033, when 76% of the promised benefits would have to be paid.

Lawmakers are expected to address the solvency of the program at some point. But the question is when. And, when they do, the changes are expected to include profit reductions, higher taxes, or a combination of both.

Surveys show that many Americans already have an unstable faith that Social Security will be welcomed when they retire.

A recent Nationwide survey found that 71% of Americans fear Social Security will run out in their lifetime.

Another survey by the Transamerica Center for Retirement Studies found that 73% of workers agree with the statement: “I’m worried that when I’m ready to retire, Social Security won’t be here for me.”

Many social security experts say that the system is unlikely to disappear completely in our lives. After all, in 1983, when the last major reforms were enacted, the system was only three months away from rupture.

However, instead of waiting for changes that could affect your life in recent years, experts say the best approach is to have a plan to accumulate your retirement income in other ways.

As simple as it sounds, the first step is to have a retirement plan.

“Most people have no plans,” said Joe Elsasser, a certified financial planner and president of Covisum, a software company that claims Social Security in Omaha, Nebraska.

“In order to test the stress of your plan, you have to start with a plan,” he said.

Assess whether you are reasonably on track with a full Social Security benefit, and then ask yourself what would happen if the cuts were fixed, Elsasser said.

Also, don’t underestimate the positive effects of working one or two more years or saving more, he said.

Ted Jenkin, CFP and CEO of Atlanta-based Oxygen Financial, said he told people to run his plan without using Social Security revenue. This total tells you how much you will need on the day you retire to maintain your standard of living.

This sum also shows you how much you need to save on your 401 (k) plan or individual retirement accounts in order to retire successfully.

You may not have to maximize your 401 (k) once you’ve figured out how much to save and what return you need to earn with that money to maintain your standard of living, Jenkin said.

Any changes to Social Security are unlikely to affect current or future retirees. But the younger generations could feel a pinch of any change.

Consequently, it is still worth delaying the application for benefits if you are approaching retirement and are in good health, Elsasser said.

By getting checks too early, retirees could drop 25% to 30% of that monthly income, depending on their full retirement age (usually 66 or 67, depending on the year they were born). .

Also consider taking advantage of other ways that can increase your income in the event of a reduction in profits or other unexpected expenses.

Shares that pay dividends are often considered a source for this.

However, other investments can also diversify your revenue streams, Jenkin said. By acquiring rental properties now, you could create a passive income stream later. Of course, these investments are not guaranteed and involve risks, he said.

In addition, investing or running a business can help you earn more monthly income. It could be a side commotion fleeing your home. Or you could be a partial owner of a company that provides a reliable cash flow.

While delaying Social Security retirement benefits to age 70 is the best life annuity you can buy, Elsasser said, there are times when you may want to consider professional products in which you pay a lump sum and get to then a steady stream of revenue.

“Annuities can be a good supplement to Social Security for people who don’t have a lot of guaranteed income,” he said.

But with so many annuity products and the various motivations to sell them, it’s key to understanding and researching what you’re buying.

Be sure to ask an agent who sells you an annuity about the commission and total commissions they will earn for selling the product and how it would compare to what they would get from managing your portfolio in a more traditional way.

For many annuities, the advisor will get a similar amount compared to what they would do if they only managed your portfolio, Elsasser said.

When used correctly, annuities can help you create your own pension, Jenkin said.