Social Security and my estimated benefits
I recently got my yearly Social Security statement of my estimated benefits and they are always interesting to read through. For my age (1973) I will get full retirement benefits at the age of 67 and at this point, in today’s dollars I would get $1,710 a month.
Disability would be less and if I took the benefits early (age 62) the amount would be even smaller a month. And I like the fine print that is in the benefits area or the ‘˜buyer beware’ area.
‘œCongress has made changes to the law in the past and can do so at any time.’ – meaning, don’t count your chickens yet.
‘œThe law governing benefit amounts may change because, by 2041, the payroll taxes collected will be enough to pay only about 75 percent of scheduled benefits.’ – meaning, by the time I am 68, I could in effect get the equivalent of at most $1,282 a month instead of the $1,710.
Another good reason to fund a 401k and IRA for yourself as opposed to relying on Uncle Sam to help out with extra money.
Let’s say it is 2041 now (but in today’s dollars) and I am only getting my $1,282 a month because I didn’t save any money in a retirement account for myself. So what can I do with that money:
Food, shelter and clothing:
‘“I would have to leave the apartment I am currently in and look for a cheaper place or take on another roommate to cover the expenses. The idea of another person living with me isn’t all that appealing, but I would have 68 years of experience and be able to scrutinize people a little better (I would hope) and those who would apply would also be older and a bit set in their ways as well, so it would be easier to find out what they are like. (I would assume) – Check out this living arrangement.
‘“ Food would be pretty much what it is now but more conscious of what I eat and how much I go through.
‘“ Clothing would be bought at thrift stores or yard sales. If I am not working, one advantage is not having to buy as much in the way of dress clothes.
Health and Fitness:
‘“ Health would be one area that would probably take more money. Since I wouldn’t be working, I would have the cheaper medical costs that come with it, so I would have to budget for any doctor visits, emergency room visits and medicines. Of course, because of the high cost of medical, I would have to be very good about what I eat, but again, it would be about the same as now.
‘“ Fitness would be of the free variety, plus as a senior I would have the added advantage of any senior group events that may be in my area. Walking and swimming are generally the safer forms of exercise by oneself and walking is free and swimming can be done at a local community center or perhaps I would have enough to purchase a membership to a pool somewhere.
Transportation:
‘“ I would still be able to drive, but I would make sure that I am keeping my vehicle up so that I don’t have to plunk down large amounts to buy a new car. I would be one of those drivers who obeys ALL the rules because I don’t want to get in an accident as well. Mainly, the car would be used only if public transportation or walking wasn’t available where I lived, because using the car often would be added wear and tear along with money out of my pocket for that wear and tear.
Time-Management:
‘“ I would have to do something with my time. If laws hadn’t changed by 2041 I might want to get a part time job to have extra for gifts and build up any savings. There is also the time I would have to give back in time to groups or people that could use my volunteered help.
Who knows what life will toss at me by the time 2041 rolls around, but this is an interesting experiment into the future of possibilities. Essentially it shouldn’t be any different that what I should be doing now. Besides the few noticeable differences in the cost of health-care as I get older and making sure I have money to cover my shelter and food costs, it would just be the same as today, making things last and using as little money as possible.
What would you add?
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Dawn C. is site owner of Frugalforlife.com where this is a repost from: Future Social Security Estimates. Dawn is residing in Colorado with her spouse, Teri, of 11 years.
I was born in 1970. When I calculate my retirement needs and assets, I don’t take any Social Security benefits into consideration at all. I’m fortunate enough to work for a company that provides a defined benefit (i.e. “traditional pension”) plan in addition to a 401(k) plan.
My partner and I also just opened some Roth IRAs to provide us with some additional retirement options, and we’re able to sock away quite a bit into the 401(k) plans.
If SS comes through for us, then there’s more we can do in retirement, or there’s more we can leave to our child(ren).
Seniors’s health care costs are skyrocketing. Be prepared to spend a fair amount of money on your Part B premium, Part D premium, and then your copays and coinsurances for all of the services you may need.
There are porgrams to assist those with low-incomes, but in today’s dollars, in New York you have to make less than $900/month as a single person to qualify for the one that pays your co-insurance.