The earlier you retire, the longer you are likely to live. While you need a significant amount of reserves in order to cover your annual expenses, Social Security can be a big help. Depending on your age, you can collect partial or full benefits.
For rough numbers, if you made $45,000 per year, you could expect Social Security benefits in the neighborhood of $15,000 per year. The problem with these benefits is that you wouldn’t be able to collect them until you were 62 and you would still need a way to come up with $30,000 in annual income from your personal savings. That is just the tip of the iceberg of the problems with Social Security, though.Checkout social security for more info.
In 2004, President Bush enlightened us all to a potential collapse in the Social Security system. Looming on the horizon is the fact that 78 million Baby Boomers will be retiring. In a country of only 302 million people, that is a significant number of retirees. Couple that with the fact that currently there are 3.1 workers to support 1 retired worker, but as time progresses there will be only 2 workers to support 1 retired worker.
Those who do have the new private Social Security system will then be responsible for their own investing decisions, even though many of them are currently having difficulties managing their current 401(k) s and IRAs.
Another potential possibility is to increase the age for Social Security distribution to 70, bumping it up from the current 67. While this, on the surface, will delay Social Security payments, it simply means that those who wanted to retire at the traditional age of 65 will be forced to work another five years, which means their private savings will have to sustain them even longer. Any increase in the normal retirement age will also mean there will be an increase in the age to receive limited benefits as well. If you are forced to retire earlier, you simply have to tough it out and fend for yourself.