Social Security has been under fire for some time. It's underfunded but there are simple fixes. Or may be not. For retirees and potential retirees, the discussions are crazy enough to drive you to Vegas for a desperate attempt at creating a nest egg. There are several discussions on the table that may affect Social Security as we know it. One is Chained CPI which would change the way the government calculates inflation and would end up reducing the cost of living increases in the system. There could also be a means test to see how much you earn and what you need. Finally, there is always the deferment of the Social Security age since we are living so much longer anyway. The average Social Security benefits for a retired worker was $1230 at the beginning of 2012.
So what is already a paltry sum could get worse, thereby making it imperative to seek other fixed-income sources for retirement. The financial advisers that get paid commissions on market transactions will tell you to put all your money in the market. However, if you walk into one of the esteemed retirement planning shops, they will solve for your monthly cash flow requirements at a paltry 2% to 3% return. So unless you have over a million bucks in savings, this strategy won't work too well.
It may be time to look at Real Estate. The risks here are vacancy, maintenance and erosion of home values. Since we are at historical lows in the housing market, the first two are the ones to watch out for. You can increase the confidence in getting regular monthly rental checks if you buy the right house in the right neighborhood and have the right property manager working for you. If you start on this journey before retirement, you can build up a decent monthly income and stay out of the Social Security drip feed. Explore how you can build a steady monthly cash flow and reduce your dependence on Social Security by investing in secure real estate.
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