After paying into Social Security all of your working life, you might think you can retire on Social Security alone. “Probably not,” said Laura Connerly, assistant professor for the University of Arkansas System Division of Agriculture.
“Some consumers assume that social security will be adequate to cover their cost of living after they retire from the workforce,” she said. “However, most people will need additional money not only to meet basic expenses but also to cover retirement dreams such as travel or hobbies.”
According to the 2013 Retirement Confidence Survey, conducted by the Employee Benefits Research Institute, retirement savings may be taking a back seat to more immediate financial concerns. Just 2 percent of workers and 4 percent of retirees identify saving or planning for retirement as the most pressing financial issue facing most Americans today. Only about two-thirds of workers say they are saving for retirement and less than 50 percent have estimated retirement costs.
Will social security benefits be enough to support your retirement lifestyle? Some simple steps to see where you are and help map out a savings plan:
Estimate retirement expenses.
1. Make a written list of all expenses. (Be sure to include travel, hobbies or anything else you plan to do during retirement.)
2. Senior citizens must purchase a Medicare Part D plan and many also purchase additional health care coverage.
3. Use the Ballpark E$timate smart phone app or use the online calculator at http://www.choosetosave.org/ballpark.
Estimate retirement income.
1. You can estimate the amount of your social security benefit by using the online calculator at www.ssa.gov/estimator
Compare expenses and income. “If social security income will exceed your expenses, you may be OK as long as benefits remain at current levels,” Connerly said.
“For most of us, our estimated social security benefit will not be enough to cover our estimated living expenses,” she said. “If that’s the case, start saving today. Make a plan to increase your retirement saving through employer provided plan, IRA, or other savings/investment opportunities.”
For more information about managing your finances visit www.arfamilies.org/money.htm or contact your county extension agent.