Un-Retiring– When Social Security is Not Enough
There are several reasons why someone would choose to un-retire. A common scenario is when social security payments become too low to survive. In addition, health insurance costs are increasing, and payments from the social security administration do not cover the increased cost of living. The future of social security is uncertain, and there could be cuts in benefits, which could lead to a person opting for un-retirement.
It’s not just the Baby Boomers who are retiring.
The number of Americans over 65 is expected to double by 2030. That means more people will rely on Social Security and other government benefits for their financial security.
The last time Social Security was reformed was in 1983 when President Reagan signed what came to be known as “The Greenspan Commission” recommendations. It raised taxes and reduced benefits by changing the formula used to calculate cost-of-living adjustments (COLA). The new COLA formula applies only to future beneficiaries and has been criticized by many as being inadequate to provide adequate income replacement for retirees.
That One Expense That Can Lead to Disaster
It’s not easy to retire, and it’s getting harder. The reasons are many, but they all come down to one basic fact: Social Security is not enough.
The average Social Security benefit is $2,484 monthly — just $29,806 annually. This may sound like a lot of money, but it’s far from enough to live on. One single disaster can cause their world to crumble. For example, if you own a home – that isn’t enough to pay homeowners insurance and taxes, car insurance, and more. But those are regular monthly costs. What if the furnace needs to be replaced? Your roof? Any one single expense can cause all finances to fall apart.
In 2017 more than 54% of Americans aged 60-64 worked part-time. More than a third of persons aged 65-69 were still working part-time. According to the Bureau of Labor Statistics, about half of those older workers have had to do so because they couldn’t afford to retire. The other half do so voluntarily because they enjoy their jobs or need extra income.
It Is Becoming Almost Impossible To Pay For Healthcare
The cost of healthcare has been rising at an alarming rate for decades. Healthcare costs increase faster than COLA (cost of living adjustments) from Social Security each year. This means that if you have a traditional Medicare plan, your choices are limited and expensive regarding healthcare services. The average cost of nursing home care in America is around $255 daily or $93,075 monthly, according to Statista.
Daily Living Costs Are Increasing Faster Than COLA
The COLA for 2021 was 5.9%, more than in recent years. However, 2022 has been slammed by increased costs. The cost of groceries alone has doubled or tripled for many products. Gas climbed from $2.50 per gallon to $4.50 per gallon. It is tragic when the economy makes retirees choose between healthcare and food. That is a no-win situation.
The Future of Social Security Is Uncertain
Social Security was originally intended as a safety net for retirees in case they couldn’t make ends meet on their own. Unfortunately, most retirees today rely heavily on it as their primary source of income during their retirement years.
But even if you’ve been paying into Social Security all these years, it’s not always enough to cover all your expenses during retirement — especially if you’ve been living off your savings account or cashing out your 401(k) early.
Turning to the Gig Economy to Help Get By Financially
To get by financially during retirement, many people have turned to the gig economy — part-time employment that can supplement their income to maintain a certain standard of living.
It’s not just retirees struggling with this issue; many younger people also find it difficult to make ends meet each month. They may be working multiple jobs to make ends meet, or they may be relying on credit cards and loans to help them get by financially. Fortunately, there are more and more options available in the gig economy, which exploded for all age groups during COVID.