The One Social Security Pitfall to Avoid at All Costs
Nasdaq Millions of seniors today collect monthly benefits from Social Security. And for some older Americans, those benefits are their primary or even sole source of retirement income.
You might assume that Social Security will suffice in covering your retirement expenses in full. But if you operate under that assumption, you might end up woefully cash-strapped during your senior years.
Don't overestimate your Social Security income
A lot of people are able to trim their spending in retirement, whether by downsizing their homes, giving up a car in the absence of having a commute, or relocating to a less expensive part of the country. And you might assume that if you're willing to do these things, then you'll be able to retire on Social Security alone.
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But one thing you should know is that Social Security will generally replace about 40% of your pre-retirement wages if you're an average earner. And while you may not need 100% of your former income once your retirement becomes official, there's a big gap between 40% and 100%.
