New York Estate Planning & Elder Law Blog
Millions of seniors collect Social Security in retirement and use those benefits to help pay for their living costs. If you are nearing retirement without much or any savings, you should know that Social Security income alone won’t cover all of your living expenses.
The average senior citizen today collects $ 17,748 a year in benefits. In most of New York State, the minimum wage at the time of this publication (late 2019) is $13.26 per hour. If work in Nassau, Suffolk or Westchester County, your minimum wage is currently $14.00 per hour. And if you work in New York City, your minimum wage is $15.00 per hour if your employer employs 10 people or fewer and $13.00 per hour if your employer employs 11 people or more. However, all of those hourly rates are set to gradually increase over the next several years, with the goal of the rate capping at $15.00 per hour for all state employers. Using the $15 per hour rate, based on a 35-hour week, would mean $31,200 a year in income. The income shortfall, based on the average Social Security benefit, is $13,452. To fund the gap, you have to tap into your savings.
To see where you fall based on the average benefit amount, compare your current annual income to the average Social Security benefit ($ 17,748). The difference is your shortfall. In other words, you will need additional funds to cover your living costs. Your savings can bridge the gap. However, if you’re nearing retirement without much savings, you may need a part-time job to cover your living costs. That is why you can’t neglect to save for retirement.
Start saving money now to build a better nest egg. Consider implementing the following changes to your day-to-day:
- Aggressively cut back on living expenses
Prepare to make changes to reduce your living now. Downsizing is a great way to receive cash and reduce living expenses. Eliminate restaurant bills, take shorter vacations, cancel memberships that you don’t use, cancel subscriptions to magazines that you do not read, or cancel subscriptions to cable and stream your favorite channels or programs.
- Consider getting yourself a second job
Earn income from a side gig and save it to fund your nest egg.
- Consider extending your career
Working more years before retiring can boost your nest egg significantly and leaves your existing savings untouched.
Social Security is an important source of income in retirement. Most people have made contributions into the Social Security system, for most if not all of their working life. Place yourself in a better financial position before you begin your retirement by saving more now.