Expert reveals the secret to setting yourself up for success in retirement
Social Security benefits are set to be insolvent in 2033, followed by a 21% cut
Do you feel secure about your retirement?
Ahead of the looming 2033 Social Security benefits cuts, Ramsey Solutions' Jade Warshaw explained how one can set themselves up for success.
"If you're trying to jump from working to retirement, Social Security should not be your parachute," the personal finance expert stressed during an interview on Tuesday's episode of "The Big Money Show."
SOCIAL SECURITY FUNDS BARRELING TOWARD INSOLVENCY WITHOUT A FIX
Warshaw noted that relying on Social Security alone following retirement won't allow for full coverage, as the benefit will only cover a portion of a person's income.
"As it stands, I mean, it's only going to account for 40% of what people were used to making."
People need to start ‘saving again’: Dave Ramsey
Ramsey Solutions founder and CEO Dave Ramsey discusses how Americans can prepare financially for retirement on ‘The Bottom Line.’
According to the Social Security Administration's 2024 annual trustees' report, the benefits are projected to be insolvent by 2033. If no legislative reforms are made, benefits would be cut by 21%.
As the 2033 deadline looms, Warshaw warned that the benefits "might not even exist anymore," and gave advice to those seeking to secure themselves financially for retirement.
"So I tell Americans, listen, set yourself up for success." She continued, "We tell people to pay off all their consumer debt, get three to six months' [income] saved, and then you should be investing 15% of your gross income every month so you can create a retirement fund that is secure for yourself."
Social Security benefits are expected to become insolvent in 2033, according to the annual Trustees report. (iStock)
Warshaw also echoed fellow personal finance expert Dave Ramsey's advice that those who planned to collect the benefit at the age of 62 should take it as long as it is invested.
"You know, if you reach 62 years old and you say, 'Listen, I don't really need Social Security, I've got my own nest egg,' yeah, take that money early," she said.
She warned, however, that pulling the benefit early would get a lower distribution, but ultimately agreed with Ramsey in advising that the benefits should be invested despite the early pull.
THIS IS CRITICAL FOR 'THRIVING' IN RETIREMENT, PERSONAL FINANCE EXPERT SAYS
Credit cards are 'keeping us broke': Jade Warshaw
Ramsey Solutions personality Jade Warshaw on younger generations living with their parents, 'buy now pay later' risks and how to best diversify stock allocation.
Concerning those who need "every bit" of the benefit, the finance expert provided a solution: wait until age 70 in order to get the most distribution possible.
"For some people, there might be a little medium of both, where you could continue working and take Social Security."
"Just know that there will be limits on the income that you can make without them penalizing you," she added, with respect to taking the benefit while still employed.
No comments: