At Globe Live Media we explain how Social Security benefits have lost purchasing power in recent years, which is why you cannot rely only on them to retire in the US.
Inflation in the United States during the year 2022 showed that, although Social Security benefits can be vital for millions of people, they should be seen as additional income and not as the only money you will count on to retire. The reason? In the year 2022 alone, Social Security benefits have lost much of their purchasing power due to rising prices of goods and services.
This reality is even more palpable for the surviving families of a deceased worker, as research by LendingTree showed that Social Security survivor benefits do not cover the annual earnings of a full-time worker. Simply put, relying solely on Social Security benefits to retire isn’t the best thing to do, especially if you’re a survivor.
LendingTree’s research indicated that Social Security benefits for a surviving spouse with two children would only cover 49.2% of a full-time worker’s earnings, leaving a monthly shortfall of approximately $3,200 on average.
This deficit, in fact, is more severe in the state of Massachusetts, where Social Security benefits for survivors only cover 40.8% of the earnings of a full-time worker.
Massachusetts is followed by the state of California (which would only cover 43.2%) and New York (which would only cover 43.9%).
Nick VinZant, life insurance specialist at ValuePenguin, noted that inflation and the cost of living have eaten into Social Security benefits. “Over the past 22 years, Social Security benefits have lost about 40% of their purchasing power. Social Security staff are trying to make adjustments, but they are not keeping up (in line with the price increase),” VinZant said in an article published in Value Penguin.
According to Value Penguin, an alternative for retiring survivors who cannot rely solely on Social Security benefits could be to purchase life insurance.
Although life insurance is a financial protection tool that can be expensive (according to Value Penguin, it could be about $147 a month), retirees or survivors may have a large pool of money that it would serve to overcome the loss of income by a deceased spouse or relative.