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<\/p>\nIt’s critical to have a plan \u2014 and a thorough one, too.<\/p>\n
Selena Maranjian
\n\u00a0|\u00a0 The Motley Fool<\/p>\n
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How the government shutdown is affecting Social Security<\/p>\n
This is what to know about Social Security payments during the ongoing government shutdown.<\/p>\n
It’s sad but true that for most of us, Social Security benefits<\/a> will provide far less income in retirement<\/a> than we’ll need or want. Indeed, as of August, the average Social Security retirement benefit was only $2,008 per month, or about $24,000 per year. Even if you collect twice that, $4,016, that will still be only around $48,000 per year.<\/p>\n So what should you do? Well, several things. Read on to learn how to set yourself up for a more financially secure and more comfortable retirement.<\/p>\n What’s your retirement plan?<\/p>\n Each of us needs to take some time coming up with a solid retirement plan<\/a>. To do that, we need to think about how much income we’ll likely need<\/a> \u2014 and how we’ll get it. As you consider what your retirement expenses will be, think about categories such as:<\/p>\n Total up how much you expect to spend on each per year and then add it all up. You might want to do this on a spreadsheet, because the totals will likely change each year due to inflation<\/a>.<\/p>\n For example, to keep things simple, let’s assume that you want to retire with $100,000 in retirement income in your first year. If inflation is around 3% as it often has been, you’ll need something like $103,000 in your second year and $106,090 in your second. (To do this math, multiply each year’s income needed by 1.03 to adjust it for 3% inflation for the next year.)<\/p>\n To be more conservative, you might plan for bigger annual increases. And to be as accurate as possible, you might consider certain categories and how much each might grow over time. For example, between early 2020 and mid-2024, transportation costs (including gas) rose 27%, per the U.S. Bureau of Statistics, while medical care grew by 10% and apparel grew by 7%.<\/p>\n Your spending on different categories will change over time, too. For example, you might not spend that much on healthcare in your early years of retirement, but that expense could become a major one in later years. Similarly, your spending on travel and transportation might shrink over time.<\/p>\n Don’t be afraid to consult a financial advisor<\/a>, either \u2014 they can help you figure these complicated matters out.<\/p>\n Multiple revenue streams<\/p>\n So since Social Security isn’t going to provide all you need, you’ll ideally want to set up some other income streams for your future years. Here are some ideas:<\/p>\n There are, of course, many other ways to generate retirement income \u2014 such as via reverse mortgages, part-time jobs, and so on. Think about what will work best for you. Here’s how your multiple streams could look:<\/p>\n Income Source<\/strong><\/p>\n Annual Income<\/strong><\/p>\n<\/tr>\n Social Security<\/p>\n<\/td>\n $30,000<\/p>\n<\/td>\n<\/tr>\n Dividends from stocks<\/p>\n<\/td>\n $30,000<\/p>\n<\/td>\n<\/tr>\n IRAs and 401(k)s<\/p>\n<\/td>\n $20,000<\/p>\n<\/td>\n<\/tr>\n Fixed annuity<\/p>\n<\/td>\n $20,000<\/p>\n<\/td>\n<\/tr>\n Total<\/p>\n<\/td>\n $100,000<\/p>\n<\/td>\n<\/tr>\n Of course, your particular arrangement might look quite different. But this is an example of how one might combine different income sources to meet a total income goal.<\/p>\n Building a monthly paycheck<\/p>\n Note, though, that these different income sources will pay you at different times and in different ways. A pension and an annuity will likely pay you each month, as will Social Security. Dividends tend to be paid quarterly, though some companies pay monthly<\/a>. You may need to let some income payments pile up and then withdraw from them from month to month.<\/p>\n With retirement accounts, you might take money out each month, or perhaps be more strategic about it, taking three or six months’ worth of retirement income installments when the market is high and less when the market swoons.<\/p>\n As you do your retirement planning, think through which withdrawal strateg(ies)<\/a> will work best for you. The more thoroughly you plan for your retirement, saving and investing over many years, the happier your future years may be.<\/p>\n The Motley Fool has a disclosure policy<\/a>.<\/p>\n The Motley Fool is a USA TODAY content partner offering financial news, analysis and commentary designed to help people take control of their financial lives. Its content is produced independently of USA TODAY.<\/p>\n The\u00a0$23,760\u00a0Social Security bonus most retirees completely overlook<\/p>\n Offer from the Motley Fool: <\/b>If you’re like most Americans, you’re a few years (or more) behind on your retirement savings. But a handful of little-known\u00a0“Social Security secrets”<\/a><\/strong>\u00a0could help ensure a boost in your retirement income.<\/p>\n\n
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