Social Security Cuts in 2025 – Top States for Financial Security in Retirement!

All US citizens are entitled to a Social Security payment at retirement, but how far this benefit goes depends significantly on where they live. Individuals who reside in inexpensive parts of the country can stretch their Social Security checks, cutting down on the need for massive personal retirement savings.

Where Is Social Security Most Viable?

A new report by GoBankingRates estimated the duration of Social Security benefits for retirees in various states. According to the report, West Virginia, Oklahoma, Kansas, Alabama and Mississippi are the places where such benefits can last the longest. Together with retirement savings, benefits under Social Security in these states were estimated to last between 26.19 and 28.8 years.

Based on Alex Bean, the University of Tennessee financial literacy expert, this report is not surprising. They stated,

In general, Social Security benefits are possible to sustain longer in states with lower cost of living, while they run out sooner in expensive states.

Social Security benefits will run out sooner in expensive states

On the other hand, retirees in states with a higher cost of living are in danger of exhausting their Social Security benefits earlier. It was discovered that Hawaii, California, Massachusetts, Alaska and New York are the states where retirees can expect to encounter the biggest financial challenges.

In such costly regions, even if one has retirement savings of $750,000 (approximately Rs. 6.2 crores) along with Social Security benefits, this amount could last only 8.8 to 15.38 years.

The reality about retirement savings

This analysis presumed that a retired individual would have $750,000 as savings, but in fact, most Americans lack such a big savings. A survey conducted by the Federal Reserve,

• The median retirement savings of American couples between the ages of 65 and 74 is around $609,230 (roughly Rs 5 crore).
• Median savings is merely $200,000 (approximately Rs 1.6 crore).

Therefore, the majority of Americans will have to plan their finances more carefully during their retired life, particularly in states where inflation is higher.

How ​​can you increase Social Security benefits?

There are some measures individuals can take to get more benefits from Social Security. The most important way is to increase the age at which they can take their retirement benefits. However, it is necessary to consider your financial situation and health before taking this decision.

Benefits of Claiming Late

• If a person waits until age 70, his Social Security income increases by 24%.
• But if one begins to receive benefits at 62, his possible earnings can be cut by 35%.

And individuals who have a higher salary throughout the term receive more benefits in retirement. However, as per Alex Bean, the length of Social Security benefits also varies based on numerous other things.

He explained, “‘Whether your house and cars are paid for, and your health care costs, all these matter more in your retirement than Social Security.'”

Family support is also significant

Family can also help in keeping costs low in retirement. Drew Powers, a founder of Powers Financial Group, said that if family members reside close by and can assist, it can be extremely cost-savvy.

“If a family member can do some home maintenance, grocery shopping, or drive to the doctor, it can save a retiree thousands of dollars annually,” he said.

Conclusion

Retirees will have to tighten their retirement planning in light of the impending Social Security reductions in 2025. Residing in states with lower costs can extend the benefits, but individual financial condition, cost of health care, and support from family members also come into play.

Hence, sticking solely with Social Security is not sufficient when it comes to planning retirement, but making a personalized and long-term plan does become necessary.

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