Planning for retirement is essential for serious minded individuals who want to be able to stop working someday. It is not easy to pay your way for perhaps 20 years or more without working. Most people are going to have to exercise financial discipline throughout their lives to reach their goals.
Simply relying on Social Security to provide you with retirement income is not going to do the trick. At the time of this writing the average payout is just under $1240 per month, and this is certainly not enough to live on comfortably.
We can report that benefits are going up because the 2013 cost of living adjustment has been announced. Surely this COLA will make things a lot easier for Social Security recipients, right?
In fact, it will have very little impact.
The 2013 Social Security cost-of-living adjustment is going to be 1.7%. For someone receiving the average Social Security benefit this will equate to an increase of about $20 or so each month.
Five bucks a week is not going to change your life. But in fact, in a very real sense the true increase is even less than 1.7% when you factor in the hike in the Medicare Part B premiums that is going to be implemented in 2013.
These premiums are deducted from your Social Security direct deposit. The amount of the increase is expected to be approximately $7 each month.
Retirement can be one of the most enjoyable periods of your life. Making a few sacrifices along the way as you accumulate a nest egg for your golden years is certainly worth the effort.
If you do not plan ahead and simply live in the moment throughout your life you may wind up working for a very long time.