A lousy $20 per month.
That’s the raise you can expect to get from your social security benefits starting in January.
For many retirees, the monthly check from the Social Security Administration is an important source of income. This check helps cover rent, groceries, or even much-needed health care.
As inflation slowly drives prices up, the average social security check is supposed to increase. That way, your social security check still covers the same amount of food or rent that it would have paid for the prior year.
But lately, social security payments haven’t been keeping up.
This past January, the average retiree was “treated” to a $24 increase in their monthly checks. But this coming year, the average retiree will only get an extra $20 each month.
What a tragedy!
The Social Security Administration Is Stuck
I have to admit, when I saw next year’s payment table published by the Social Security Administration, I got angry.
One of my closest friends is a retiree whose only income is his social security check. He has struggled to find work during this coronavirus season and it has been difficult for him to make ends meet. The $20 raise that he’ll likely receive in his monthly check won’t do much to help him get ahead.
Just look at how the 1.3% cost of living adjustment (or COLA) will affect different social security recipients!
I don’t know about you, but I would have a hard time just covering basic living expenses with these social security payments — not to mention actually living a Rich Retirement with this amount of income.
Unfortunately, we can’t expect the Social Security Administration to do any better going forward.
That’s because even with these paltry payouts to retirees, the Social Security system is on life support!
The trust fund used to pay benefits to retirees is slowly being depleted. The amount of cash being paid out to retirees is more than the income this fund receives from payroll taxes and interest on cash held by the trust fund.
And the most recent estimates show that the primary trust fund for retirement payments will run out of cash by 2035 — just 15 years from now.
With the coronavirus crisis causing a spike in unemployment, there are now fewer workers paying into the Social Security fund than previously expected. My guess is that when the next estimate comes out, the new date for funds running out will be much sooner than 2035.
So it’s no surprise that the Social Security Administration is being stingy when it comes to the annual raise you’ll receive in 2021. After all, the administration has to do its best to conserve cash and keep from running out of money!
Of course, that doesn’t make it any easier for retirees who have been insulted by this tiny $20 raise.
Don’t Get Mad — Get More Income!
It takes a lot to get me angry these days.
After years in a high-pressure job as a hedge fund manager and even more years as the father of teenagers, I’ve learned to keep my stress levels pretty low.
But when I saw this news from the Social Security Administration, I’ll admit I was a bit ticked off…
After all, American retirees deserve better!
If you’re receiving social security checks today, it means that you likely spent most of your career paying into the system with every paycheck you received. And now, you deserve to receive fair benefits from that same system.
But like most other areas in life, it doesn’t pay to be angry.
What really matters is how you react to adversity.
The financial environment for retirees today is challenging to say the least.
- Interest rates are at historic lows, making it tough to generate income from your savings.
- The Social Security Administration is insulting retirees with a monthly raise of just $20.
- And the stock market is becoming increasingly volatile, making it difficult to safely grow your retirement wealth.
Quite frankly, I don’t think you can count on social security payments to fully fund your retirement.
Whether or not the social security checks continue to be sent out, it’s just too difficult to make ends meet on the paltry payouts you’ll be receiving.
That’s why it’s so important to set up multiple streams of retirement income.
If you’re able to generate payments from work-free opportunities and able to tap into lucrative dividend stock payments, you won’t have to rely on the Social Security Administration to take care of your day-to-day expenses.
Here at Rich Retirement Letter, it’s our goal to showcase the best opportunities to grow your retirement income.
That way, you can enjoy your golden years without having to worry so much about your finances. I hope that our work here will allow you to focus on the things that really matter in life!