Planning to retire on Social Security alone? Ask yourself these two questions first. | Smart Change: Personal Finance

Now Social Security may end up paying you a decent monthly compensation. But before you decide to make this your only source of income during your graduate years, be sure to ask these basic questions.

Most seniors need about 70% to 80% of their previous income to maintain a comfortable lifestyle. If you plan to live frugally into retirement, you may be able to get a lower percentage of alternative income.

But can you really make it happen with just 40% of your pre-retirement earnings? If you didn’t save your senior years and left yourself with only Social Security, this is the amount of alternative income you might be looking for. This assumes that there are no reductions in interest.

Currently, benefit cuts are an obvious possibility for Social Security, with the program’s trust funds expected to run out of money by 2035. Once that happens, the program may have to cut benefits, at which point it may replace you with less than 40% of your previous earnings.

Finally, retiring on Social Security alone means a severe wage cut. You will need to really make sure that you can pay the basic expenses and continue to maintain a decent quality of life with this type of income.

While Social Security may not completely replace your previous salary, there are steps you can take to get a higher monthly benefit. One of these is delaying your filing past your full retirement age (FRA).

At FRA, you can claim your entire monthly benefit based on your personal salary history. FRA begins at age 67 for anyone born in 1960 or later.

Meanwhile, for each year you delay your filing beyond the FRA, your benefits increase by 8% on a permanent basis. At the age of 70, this urge disappears. But all said, if your FRA is 67, you can give a 24% payment by delaying enrollment until age 70. And if you plan to go that route, just living on Social Security may be more rewarding.

Some people don’t realize that Social Security will not fully replace their previous income until it is too late. Now that you realize this fact, you may want to rethink your plans to retire on Social Security only.

If you’re about to retire, you may not have much time to build a nest. But you can try to save SomethingAlso, delay the exit of your workforce by a few years to increase your cash reserves.

Working part-time during retirement is another option worth considering. The income you get from the job can well complement your Social Security benefits and make up for the lack of savings. Plus, having a job will give you something to do with your newfound spare time. That alone makes working a good option.

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