Is it possible to retire alone in 2024?

If you don’t expect to have a lot of retirement savings, or if you just want to know if you really do need to aggressively save for retirement, the question, “Can I live on Social Security alone?” is a completely fair question. The average retired worker gets $1,915 per month, and this may not sound like enough to you.

The short answer is that you will always be in better financial shape with a significant retirement nest egg, but in some cases it might be possible to survive on Social Security alone. Here’s a quick overview of how to determine your own retirement income needs, and why Social Security income means different things to different households.

Older couple looks at a check.Older couple looks at a check.

Older couple looks at a check.

Image source: Getty Images.

How much pension income do you need?

Social Security is intended to replace about 40% of the average worker’s pre-retirement income if filed at full retirement age. A common rule among retirement planners is to assume that you will need 80% of your salary in retirement to maintain the same lifestyle.

Of course, the 80% rule is just a general rule of thumb. It simply assumes that in retirement you will need the same disposable income, but you will no longer have certain expenses (such as the need to save money in your retirement accounts). Depending on your circumstances, your actual income needs may be higher or lower.

For starters, many people aim to eliminate as many expenses as possible before retirement. For example, if you can pay off your mortgage and your vehicles before you retire, you will need significantly less money to cover your living expenses than when you made those payments.

A wide range of social security benefits

As mentioned, the average retired worker gets about $23,000 a year from Social Security, but it’s entirely possible to get much more. You can read an in-depth discussion of the Social Security benefit formula, but there are two main factors that determine your benefit: the age at which you start collecting it, and your average (inflation-adjusted) earnings over the 35 highest earning years. of your career.

While very few people do, if you maximize Social Security taxable income for at least 35 years And wait until age 70 before collecting your benefits; the maximum possible Social Security benefit is $4,873 per month, or just under $58,500 per year. I bet there are quite a few retirees who do that too could be live on that.

There are also partner benefits to consider. The short explanation is that if you are a married couple and one spouse has not worked or has earned relatively little, a spousal benefit can provide as much as half of the main earner’s monthly benefit.

Examples of replacement of social security income

There is a wide range of benefit scenarios with Social Security, so let’s look at a few to illustrate how Social Security can mean very different things to different people.

Let’s first say that a single retiree has averaged an inflation-adjusted salary of $100,000 throughout his career, and decides to retire and file for benefits at age 64, which is well before full retirement age. is 67 years old. Based on the current 2024 benefit formula, this would equate to a monthly benefit of approximately $3,134. However, claiming this three years before reaching full retirement age would result in a 20% reduction, giving this retiree $2,507 per month, or $30,087 per year. This would be about 30% of what they earned before retiring, and it probably won’t be enough.

Second, consider the case of a married couple. One spouse earned an average inflation-adjusted income of $75,000 per year over his entire career. The other was a stay-at-home parent and did not work enough to receive Social Security herself. Both spouses wait until their full retirement age of 67 before collecting benefits.

In this case, the primary earner’s income would provide a monthly retirement benefit of $2,681, and because they waited until full retirement age, they would get all of that. However, their spouse would also be eligible for benefits at work, and waiting until their full retirement age would result in half the primary earner’s benefit, or about $1,340 per month.

Combined, this couple would receive $4,021 in Social Security income, or $48,252 per year. This would replace 64% of their pre-retirement income, which would not be the case idealbut it could certainly be a workable situation.

The key point is that a Social Security check may be enough some retirees, but not others. It depends on how much income your household receives from Social Security and how much income you need to cover your living expenses.

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