Survey Reveals Concerns About Retirement Savings and Social Security Adjustments
Are you worried about outliving your savings in retirement? You’re not alone. According to a recent survey by Prudential, many respondents express concerns about their financial security as they age. In fact, 67% of 55-year-olds, 59% of 65-year-olds, and 52% of 75-year-olds worry about outliving their savings.
The age 55 cohort is particularly feeling the financial strain, with a median retirement savings of only $47,950 compared to the recommended balance of $446,565. This group is the first to enter retirement without the safety net of pensions, adding to their financial insecurity.
One major source of retirement income for many Americans is Social Security. Unlike other sources, Social Security benefits are adjusted for inflation each year. However, as inflation rates fluctuate, so do these adjustments. This year, beneficiaries saw a 3.2% cost-of-living adjustment, resulting in an average increase of just over $50 per month.
Looking ahead to 2025, estimates suggest a 3% cost-of-living adjustment for Social Security benefits. However, some experts argue that the current measure of inflation used to calculate these adjustments may not accurately reflect retirees’ actual costs. For example, the consumer price index for urban wage earners and clerical workers (CPI-W) assumes older adults spend about two-thirds of their income on housing, food, and medical costs, when in reality these items make up about three-quarters of their budgets.
As a result, some estimates predict a lower cost-of-living adjustment for 2025, potentially around 2.6%. This discrepancy highlights the challenges of accurately gauging retirees’ expenses and the importance of planning for potential fluctuations in income.
If you’re concerned about your retirement readiness and the impact of inflation on your savings, it may be time to reassess your financial plan. Consider working with a financial advisor to ensure you’re prepared for the uncertainties of retirement and can enjoy your golden years with peace of mind.
Disclaimer: The information provided in this article is for informational purposes only and should not be considered as financial advice. The content is based on general research and may not be accurate, reliable, or up-to-date. Before making any financial decisions, it is recommended to consult with a professional financial advisor or conduct thorough research to verify the accuracy of the information presented. The author and publisher disclaim any liability for any financial losses or damages incurred as a result of relying on the information provided in this article. Readers are encouraged to independently verify the facts and information before making any financial decisions.