"Social Security relies primarily on payroll tax revenue to keep up with benefit payments. But a shrinking workforce coupled with an expected surge of new benefit claims as boomers retire is apt to put a strain on Social Security's resources, not to mention rob the program of much-needed revenue in the coming years."
"Social Security's Old-Age and Survivors Insurance Trust Fund, which pays retirement benefits, is expected to be out of money by 2032. At that point, Social Security may be looking at a 23% benefit cut. And that's something all working Americans need to plan for."
"If you earn a typical wage, you can expect Social Security to replace about 40% of it, assuming no cuts. But that means slashing your own pay by 60%, which you may not want to do. So either way, it's important to have savings for your retirement."
"However, with potential Social Security cuts looming, it's more important than ever to build a strong nest egg. And rather than have your savings supplement your Social Security checks, you should aim to do things the other way around - have your savings cover most of your retirement expenses, and let Social Security pick up the slack or cover leisure and fun spending."
Social Security depends mainly on payroll tax revenue to pay benefits. A shrinking workforce and rising benefit claims as boomers retire are expected to strain program resources and reduce revenue. The Old-Age and Survivors Insurance Trust Fund is projected to run out of money by 2032, which could lead to about a 23% reduction in benefits. Even without cuts, Social Security typically replaces only around 40% of a typical wage, meaning most retirement expenses must come from other sources. Building a strong nest egg is emphasized, with savings covering most expenses while Social Security supports remaining needs. Strategies include starting early for compounded growth, maximizing employer 401(k) matches, and investing appropriately.
Read at 24/7 Wall St.
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