Social Security benefits are an important source of income for most retirees. But if you plan on these benefits providing you with enough to live on as a senior, you’re likely to face some really serious financial struggles.
While it may be tempting to rely on these guaranteed benefits to fund your life of leisure in retirement, there are three big reasons why that just isn’t going to work out.
1. Social Security is designed to replace only 40% of income
Social Security benefits were never intended to be the sole source of retirement funds, or even necessarily the primary source. They were supposed to be part of a three-legged stool, with a pension and savings acting as the other two legs necessary for financial stability.
Because these benefits weren’t designed to support seniors without that other income, the formula put into place to determine benefits doesn’t result in seniors receiving enough to sustain them. Under the current benefits formula, your Social Security checks are designed to replace about 40% of pre-retirement income.
You can’t take a 60% cut to your pay and maintain your quality of life. In fact, most financial…