Posted by (InsurGuru©️Retirement College) Retirement Income Gap, the English name is Retirement Income Gap, or RIG for short. I am afraid it is one of our efforts to prepare for retirement after decades of hard work.The most important number.
What is the retirement income gap?
The retirement income gap is a number, which refers to the difference between the amount of money we need for fixed monthly living expenses after retirement and a guaranteed source of fixed income.
Monthly living expenses are those that can be avoided without retirement. They usually include: housing, food, and medical care expenses.
Therefore, in order to ensure a financially secure retirement life, we need to estimate the retirement income gap.
Planning the expenses of retirement
With the improvement of living standards, life expectancy continues to increase, and the retirement income gap increasingly affects our lives.In order to ensure a financially healthy retirement life, the first step in planning is to estimate the monthly expenses of retirement life.It is worth noting that the monthly expenses at retirement are different from our current monthly expenses.
In some cases, the cost of retirement life may be reduced, such as the transportation cost saved by not having to commute; but in other cases, the cost of retirement life will increase because of starting to plan trips, vacations, and developing hobbies after retirement.
In addition, inflation will inevitably increase our monthly expenses.Considering the influence of various circumstances and factors on the household expenditure table, the ultimate goal of this link is to estimate our expenditure figures when we retire.
Fixed source of income at retirement
The second step is to consider our fixed income sources after retirement.Such as social security pensions, or retirement pension plans.For most people, the combined income of the two is usually not enough to cover our monthly fixed expenses.Therefore, seeking supplementary retirement income plans to eliminate the impact of the retirement income gap on our future lives has become a problem that most people living in the United States need to face and solve.Based on this strong demand, the United States has developed the "Supplementary retirement income"oflife insurance和pensionmarket.
insurGuru©️Retirement CollegeIt is believed that a healthy, “guaranteed cash flow” retirement fixed income structure is usually composed ofSocial security pensions, retirement accounts (401k, 403b, Pension, etc), life insurance and annuitiesThese three parts constitute.
How much is my social security pension?
点击 这里, Visit the official website of the Social Security Bureau, you can register an account to see our forecast social security pension situation.The money we actually get at that time has a lot to do with the age of the application.Our social security bill will be estimated when we are 62 and 70 years old.If our spouse is not working, then the spouse will also have a spouse benefit.
Pension benefit plan for civil servants
If we work for the government, whether it is the federal government, the state government or the city government, we may have pension benefits from a public agency.But this public pension benefit may affect our social security benefits. In 1983, the "Wealth Elimination Clause" (WEP) was promulgated, which will reduce the social security benefits of civil servants while receiving public pensions.At the same time, the "government subsidy offset clause" (GPO) will also reduce quota benefits while civil servants receive public pensions.
According to the research report of the National Bureau of Economic Research*,3.5% of households in the United States are affected by at least one of WEP or GPO, resulting in a decline of approximately 20% in socially guaranteed income, and the affected households will lose approximately one-third of their household wealth.
To learn more about the impact of WEP and GPO on us, you can visit the official website of the US Social Security Administration ssa.gov.
appendix:
01. "The Social Security Windfall Elimination and Government Pension Offset Provisions for Public Employees in the Health and Retirement Study", 2013.12, NBER, https://www.nber.org/papers/w19724
