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Social security benefits have lost 33% of their purchasing power since 2000 – Motley Fool



Millions of adults collect social security on retirement, and for the most part these benefits represent the bulk of their income. Unfortunately, those who rely on social security risk too much to fight financially during their golden years, and new data from the non-partisan league of the elderly continue to worsen this moment.

Social security benefits have lost a huge 33% of their purchasing power. since 2000, according to a new report. And although recipients saw a rather generous cost-of-living adjustment, or COLA, in 2019, this push was effectively discounted by other rising costs.

Costs for food and medical expenses – the things pensioners tend to spend much of their revenue more than other general costs, leaving the beneficiaries to bear the burden. And despite the fact that average monthly social security has risen by 39 dollars this year, this increase was not enough to compensate for the fact that the overall cost of living is rising faster. dollar banknote "src =" https://g.foolcdn.com/image/?url=https%3A%2F%2Fg.foolcdn.com%2Feditorial%2Fimages%2F525851

%2Fsocial-security-card-and-money_gettyimages-177533853 The problem is compounded by the fact that many elderly people have no access to income beyond social security, and where the benefits are not enough, recipients tend to struggle to pay their bills, and while today's retirees can take steps to reduce their living costs, either by cutting, relocating, or other similar relative many drastic measures, many are already at a time when they just pay for basics and nothing more

However, it is not too late for workers with the time between now and retirement to start saving themselves for their golden years So they are less likely to be financially behind if social security continues to be difficult to handle.

Complementing Social Security with Savings

Many people mistakenly think that they can only live by social security and many adults are trying to do just that. However, these benefits are only intended to replace about 40% of the retirement income of the average worker and most retirees have to double that amount to live comfortably.

Workers who begin building their nest early enough in their lives can accumulate a good amount of wealth by saving modest amounts over time, as shown in the following table:

Let's start saving $ 300 a month [19659013] 19659013]

$ 196,000

$ 196,000

$ 196,000

$ 196,000

] $ 165,000

Data Source: AUTHOR

Please note that these calculations imply an average annual return of 8%, which is slightly below historic average stock market value. Those who have a 10-year or longer savings period have to stock up their stocks when building their nesting eggs, as this is enough time to overcome the downturn and move forward. Additionally, 8% are well ahead of total inflation – something Social Security apparently fails to do. Moreover, while splitting $ 300 a month over time is not easy on its own, it is also not possible for middle workers who are willing to keep their costs under control. rather they will shorten the luxury and will live in retirement social insurance. This plan, however, is dangerous, as seen by the millions of elderly people who are today dangerously close to the poverty line without an easy way to turn things around.


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