Could you live on less than $30 a day? If you don't have a pension or adequate personal savings, that's what the typical retiree will get in 2036, even setting aside the near-term risks facing Social Security.
As of the beginning of 2011, the average monthly Social Security check for a retired worker was about $1,177. According to its trustees, the Trust Fund that helps support those payments is on track to run dry by 2036. Once the Trust Fund runs dry, Social Security expects to be able to pay about three-quarters of its scheduled benefits.
That works out to about $882.75 per month, or around $29.02 per day.
Actually, Make That Less Than $20 a Day
For those a few decades from retirement who expect to rely solely on Social Security, the inflation-adjusted equivalent of that $29.02 a day needs to cover rent, utilities, food, health care, clothing, transportation, and all the other necessities of life.
For perspective on how quickly that cash can evaporate, the table below shows typical current Medicare out-of-pocket premiums:
Typical Monthly Premium
Equivalent Daily Premium
Sources: Medicare, Q1 Group, Kaiser Family Foundation.
Once Medicare's premiums are paid, that leaves all of $18.44 a day, or $560.97 per month, from typical Social Security retirees' checks to cover the rest of their costs of living. That's a tough situation to be in, but it's what the average Social Security retiree can expect to see in the not-too-distant future.
3 Keys to Boosting Your Benefits
Of course, you don't necessarily have to settle for the average benefit. If the prospect of scraping by on $29.02 a day (or $18.44 after Medicare premiums) seems daunting, you can potentially increase your ultimate benefit -- even late in your career -- by adjusting three key factors:
1. Your years of work: Your Social Security payout is tied to your 35 highest-earning years, including $0 for years you didn't work. Work a few additional years to replace any goose eggs in your history, and your benefits will rise.
2. Your highest-earning years: If you're more highly skilled and better compensated later in your career than you were early on, you can replace low-value early years with high-value later ones, even if you already have 35 years of work in your record.
3. Your age when you start collecting: Social Security pays on a rising scale depending on how old you are when you start claiming benefits, with a range from age 62 to 70. The longer you wait before starting (up until age 70), the higher your benefit amount.
There's one other way to improve your retirement income: Keep working as long as possible and invest what you can, with an eye toward investments you can later tap for supplemental income.
Keep Earning During Your Golden Years
There's no law that says you need to stop working as soon as you're eligible for Social Security. In fact, once you reach what Social Security calls your "full retirement age," you can even work and collect your Social Security benefits without seeing those benefits reduced. Unless you're facing mandatory retirement or finding yourself caught in a wave of downsizing, you can even stay at your current job, as long as you still enjoy it.
If you do find yourself needing to seek employment in your golden years, you're not limited to prototypical senior jobs like being a Wal-Mart (WMT) greeter. Indeed, AARP publishes a biennial list of the best employers for workers over 50, the most recent of which includes the following:
Spot on AARP's List
First Horizon National (FHN)
Pepco Holdings (POM)
Avis Budget Group (CAR)
Corinthian Colleges (COCO)
If any of the employers on AARP's list have job opportunities near where you live, it may be worth looking into if you'd like to supplement what little pittance Social Security will be paying. After all, when all is said and done, for your golden years to truly be golden, you not only need enough money to be comfortable -- but enough pleasure in your life to enjoy your remaining time.
Get info on stocks mentioned in this article:
At the time of publication, Motley Fool contributor Chuck Saletta owned shares of Avis Budget Group and Intel. The Motley Fool owns shares of GlaxoSmithKline, Intel, and Wal-Mart, and has bought calls on Intel. Motley Fool newsletter services have recommended buying shares of Wal-Mart, Intel, and GlaxoSmithKline, as well as creating diagonal call positions on Intel and Wal-Mart.