How much of your retirement expenses will Social Security cover? | Personal finance
Once you get your estimated monthly allowance, you can multiply it by 12 to get your estimated annual allowance. Then you can divide that by your estimated annual retirement expenses and multiply that by 100 to determine what percentage of your income Social Security will cover.
For example, if Social Security tells you that you can expect a monthly benefit of $ 1,500, you must multiply that by 12 to get an annual benefit of $ 18,000. If you plan to spend $ 45,000 a year in retirement, divide $ 18,000 by $ 45,000, then multiply by 100 to get 40%. In this scenario, it is the percentage of your total expenses that Social Security would cover.
Keep in mind that these results could change over time if your retirement plans change. And if the government makes any changes to the program, that will also affect the amount you receive. So it’s a good idea to review this calculation every year or two to make sure nothing major has changed.
What to do about what social security does not cover
Unless you plan to survive on $ 25,000 a year or less in retirement, you will likely need personal savings to supplement Social Security. There are a few smart places you can store that money while waiting to help it grow.