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Why Social Security Alone IS a Risk and What You Can Do about It.

Social Security is a valuable program that provides a financial safety net for millions of Americans in their retirement years. However, relying solely on Social Security for retirement income can be risky. Here are some of the risks associated with relying solely on Social Security for retirement income:

  1. Social Security Benefits May Not Be Enough

Social Security benefits are designed to replace only a portion of a worker’s pre-retirement income. The Social Security Administration estimates that benefits will replace about 40% of pre-retirement income for the average worker. This means that if your pre-retirement income was $50,000 per year, you can expect to receive about $20,000 per year in Social Security benefits. For many people, this may not be enough to live on in retirement, especially if they have significant expenses, such as medical bills or long-term care costs.

  1. Social Security May Not Be Around Forever

Social Security is funded by payroll taxes paid by current workers, which are used to pay benefits to current retirees. As the population ages and the number of retirees grows, there may not be enough workers paying into the system to support the benefits promised to retirees. In fact, the Social Security Administration projects that the trust fund that supports the program will be exhausted by 2033. While the program is unlikely to disappear entirely, it is possible that benefits could be reduced in the future.

  1. Social Security Benefits May Be Taxed

If your retirement income is high enough, your Social Security benefits may be subject to federal income taxes. This can reduce the amount of income you have available to cover your expenses in retirement. For example, if you are married filing jointly and your combined income (including half of your Social Security benefits) is more than $34,000, up to 85% of your Social Security benefits may be subject to federal income taxes.

  1. Social Security May Not Keep Up with Inflation

Social Security benefits are adjusted each year to keep up with inflation, but the amount of the adjustment may not be enough to keep pace with the rising cost of living. This means that the purchasing power of your Social Security benefits may decrease over time, making it more difficult to cover your expenses in retirement.

  1. Social Security Does Not Provide Long-Term Care Coverage

Long-term care, such as nursing home care or in-home care, can be a significant expense for retirees. Social Security does not provide coverage for long-term care, so retirees who need this type of care may need to rely on other sources of income, such as personal savings or Medicaid.

  1. Social Security Benefits May Be Reduced if You Work in Retirement

If you choose to continue working in retirement, your Social Security benefits may be reduced if you earn too much income. This is known as the earnings test. For example, if you are under full retirement age for the entire year and earn more than $18,960 in 2021, your benefits will be reduced by $1 for every $2 you earn over the limit.

What Can You Do?

Consider building a low risk high reward home business. I remember my grandpa repairing bicycles and bring them to the swap meet for extra income. He also would sell other items he picked up at yard sales, repaired and resold them at the swap meet. I don’t know if they need the money or he just wanted to stay busy but I do know they were on a fixed income with Social Security. I admire his work ethic but today there are other options you can explore. One that I recommend is a home based business where you can work the hours you want from anywhere. Check it out here and watch the short video. Retirement Options Video

In conclusion, relying solely on Social Security for retirement income can be risky. While Social Security provides a valuable safety net for retirees, it may not provide enough income to cover all of your expenses in retirement. In addition, the program may not be around forever, benefits may be taxed, and they may not keep up with inflation. Retirees who need long-term care may need to rely on other sources of income, and working in retirement may result in a reduction in Social Security benefits. To mitigate these risks, it is important to have other sources of retirement income, such as personal savings, pensions, or retirement accounts. Working with a financial advisor can help you create a retirement plan that takes into account your unique circumstances and helps you achieve your retirement goals.

Thanks for reading!

Mark Balderrama


How To Add Income Streams to Improve Your Retirement Plan

Retirement is a phase of life that most people look forward to with great anticipation. It is a time when you can relax, travel, spend time with family and friends, and pursue hobbies and interests that you may have put on hold during your working years. However, to truly enjoy your retirement, you need financial stability. One of the most effective ways to achieve this stability is to have multiple income streams.

What Are Multiple Income Streams? Multiple income streams are sources of income that you have in addition to your primary source of income, such as your job. They can come from a variety of sources, such as rental properties, dividends from investments, royalties from creative work, or income from a side business. Having multiple income streams means that you are not relying solely on one source of income, which can be risky, especially during retirement.

Why Are Multiple Income Streams Important for Improving Your Retirement?

There are several reasons why having multiple income streams is important for improving your retirement:

  1. Increased Financial Security One of the most significant benefits of having multiple income streams is increased financial security. When you have diversified income sources, you spread the risk and minimize the impact of any negative event on one source of income. For example, if you rely solely on your pension, any changes to the pension plan could severely impact your retirement. But if you have other sources of income such as rental properties, investments, or a side business, you have a safety net that provides financial security.
  2. Better Retirement Lifestyle Having multiple income streams can help you maintain your lifestyle during retirement. When you have more than one source of income, you can ensure that you have enough money to cover all your expenses and indulge in activities that you enjoy. This can include travel, hobbies, and other leisure activities. It also gives you the flexibility to adjust your expenses according to your income, making it easier to live comfortably.
  3. Protection Against Inflation Inflation is a reality that affects everyone, including retirees. Having multiple income streams helps to protect against inflation as different income streams can have different inflation rates. For example, rental income may increase with inflation, while interest income may remain constant. By having multiple sources of income, you can protect yourself against inflation and ensure that your income keeps pace with rising expenses.
  4. Higher Savings Multiple income streams also allow you to save more for retirement. When you have more than one source of income, you can allocate a portion of each income stream towards savings. This not only helps you build a larger retirement corpus but also ensures that you have a cushion for emergencies or unexpected expenses during retirement.
  5. Increased Flexibility Having multiple income streams gives you the flexibility to retire on your own terms. You may not need to rely on a single source of income to retire. You can retire when you want, and how you want. You may choose to work part-time or start a small business during retirement to supplement your income. Multiple income streams give you the freedom to make these choices and have a more fulfilling retirement.

How to Build Multiple Income Streams

Building multiple income streams takes time and effort, but it is well worth it. Here are some strategies to help you build multiple income streams:

  1. Invest in Real Estate Real estate can be a great source of passive income during retirement. You can buy rental properties that generate rental income or invest in real estate investment trusts (REITs) that provide regular dividends.
  2. Invest in the Stock Market Investing in the stock market can be a great way to build wealth and generate income. You can invest in dividend-paying stocks that provide regular income or growth stocks that can appreciate over time.
  3. Start a Side Business Starting a side business can be a great way to supplement your income during retirement. You can start a business that leverages your time and experience.

In my opinion I think a great business that is low risk is a home based business.

There are many advantages to having a home-based business, including:

  1. Lower Overhead Costs One of the biggest advantages of having a home-based business is lower overhead costs. With a home-based business, you do not need to rent or purchase a separate office space, which can be a significant expense. You can also save money on commuting costs, as you do not need to travel to work every day.
  2. More Flexibility A home-based business provides more flexibility than a traditional office-based job. You can set your own hours and work when it is convenient for you. This can be particularly helpful if you have other commitments, such as childcare or caring for an elderly relative.
  3. Increased Work-Life Balance Having a home-based business can also provide an increased work-life balance. You can work from home, which means you do not need to spend time commuting to and from work. This can give you more time to spend with your family and pursue hobbies and interests outside of work. Additionally, you can set your own schedule, which allows you to balance your work and personal life more effectively.

To review my personal recommendation for the best home based business that can be built anywhere and anytime, even online if you want! Watch the short video and see for yourself HERE!

Thanks for Reading and consider subscribing!

Mark Balderrama

Me and Twister!