If you search online, you’ll encounter various suggestions for enhancing your Social Security benefits. For instance, improving your job skills to secure higher wages can increase your program payouts. Another strategy is to consider delaying your filing until age 70, ensuring the maximum monthly benefit based on your earnings history.
While striving for a higher monthly Social Security benefit is commendable, it’s essential to avoid fixating solely on this aspect. Equally significant is your effort to boost your savings.
Relying solely on Social Security for retirement isn’t feasible. For the average wage earner, it may replace around 40% of pre-retirement income, assuming no benefit cuts. However, if lawmakers fail to address Social Security’s impending financial challenges, potential cuts could further reduce your program income.
Hence, it’s crucial to divert your focus toward increasing contributions to your IRA or 401(k). While securing a higher monthly Social Security benefit is advisable, it’s also essential to recognize that your personal savings might prove more valuable during retirement.
If you plan to travel extensively and pursue expensive hobbies during retirement, you may need an income similar to what you earned while working. Social Security can only cover up to 40% of your earnings, so the remaining amount will depend heavily on the contributions you make to your IRA or 401(k).
Strive to increase contributions gradually. Some individuals commit to fixed monthly IRA or 401(k) contributions over the years, which is reasonable. However, an optimal approach involves elevating your savings rate annually, especially by saving salary raises when feasible. Ideally, your earnings will rise over time. Initially, saving $300 monthly when earning $60,000 yearly is one thing, but maintaining that rate as you progress to a $125,000 income through promotions is another.
If your earnings don’t grow substantially year after year, consider exploring the gig economy. Numerous flexible part-time opportunities exist, and income from such endeavors can supplement your IRA or 401(k) without affecting essential expenses.
It’s apparent that maximizing your Social Security benefits is a priority, but don’t overlook the significance of growing your savings. Take measures to ensure sufficient retirement income beyond Social Security’s scope.