You would do well to understand the facts about Social Security when you are planning ahead with retirement in mind. A lot of baby boomers are finding that they are unprepared, and it could have something to do with the impression that Social Security will be taking care of everything.
At the end of 2012 the average Social Security monthly benefit was all of $1262. The average is just that, and of course some people qualify for more. However, the maximum is a bit over $2500 per month, which is not exactly a king’s ransom.
In spite of the fact that these benefits are rather limited the Social Security Administration states that 46% of single Social Security recipients derive at least 90% of their income from their monthly benefit.
This is why retirement planning attorneys are going to emphasize the need to plan ahead intelligently to accumulate the resources that you need to augment your Social Security benefit.
Another challenge that people who are overly reliant on Social Security face is the fact that prices and expenses tend to go up, and the cost-of-living adjustments that are provided for recipients are quite modest.
The cost-of-living adjustment for 2013 was just 1.7%. It was calculated using the Consumer Price Index for Urban Wage Earners and Clerical Workers to measure inflation.
While 1.7% is not a lot, it would have been even lower if a chained CPI was used to calculate inflation. A move to a chained CPI is included in the 2014 budget that has been proposed by the president.