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Recently I received a statement from Social Security on the status of my retirement benefits. I have scanned in my projected benefits as summarized in this statement. You can easily see that my projected retirement benefits are scheduled to be $1,556 a month, if I retire at the age of 62. I'm 37 right now. This means that I'll be receiving this money 25 years from now.
With inflation, this monthly benefit will probably equate to around $700 in today's dollars. Who can possibly live on $700 a month? Here is what I'm wondering...
- Will I have enough money to be able to eat every day?
- Will I be able to afford a car to drive myself to the doctor?
- Will I be able to afford utilities for my home?
Lets assume that I'm completely debt free including the mortgage on my home, can I survive on $700 a month? Notice I wrote survive. Having money for fun, travel and entertainment definitely won't be an option. I honestly don't think someone could survive on $700 a month.
Now, if I'm lucky enough to work until the age of 70, I'll increase my monthly benefits to $2,908 a month. This monthly benefit, adjusted for inflation, will be around $1,300 in today's dollars. According to statistics, my average life span is to the age of 77. I'll have just 7 years of retirement.
According to my earnings record in the statement I received, which is not included above, I began working in 1986. I was sophomore in high school. This was probably my the first job when I received a paycheck. I actually began working in elementary school with a paper route. In my paper route, I made profits, I didn't earn a pay check. I guess I didn't pay any payroll taxes on my newspaper route income.
I get to work from 1986 through 2042 to be eligible for $1,300 a month of inflation adjusted retirement benefits for about 7 years.
I'm not the smartest guy in the world, but this doesn't seem like such a good deal to me. What is even scarier is the disclosure at the bottom of the benefit section above. It reads:
"* Your estimated benefits are based on current law. Congress has made changes to the law in the past and can do so at any time. The law governing benefit amounts may change because, by 2041, the payroll taxes collected will be enough to pay only about 78 percent of scheduled benefits."
Huh?
I guess this simply means that I might not actually collect a penny of social security in retirement. Here is my real retirement formula according to Social Security:
56 Years of Work = $0.00 Retirement Benefits
Rob Minton
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