Something you might consider in your planning.....
If your Social Security payments are scaled back, or worse, what would it cost you to buy something similar in the private sector?
We can do some math.
According to ImmediateAnnuities.com, a 66-year-old man would have to pay $128,000 for an annuity providing him with income of $10,000 for life. A 66-year-old woman would have to pay even more, about $138,000.
That's for an income of $10,000 a year. If you think you'll need $40,000 a year to live on, naturally you'd need to set aside four times as much, or about $550,000.
And this would only be for a straight annuity, with absolutely no inflation protection at all.
Few life insurers provide inflation-protected annuities. New York Life offers something close: an annuity that increases payments by a certain percentage each year. This won't protect you from runaway inflation. But at least an annual increase of, say, 3% will give you some cushion.
I asked the company how much a 66-year-old would have to pay for an annuity paying $10,000 a year, with a 3% annual increase.
The answer? About $180,000. It's about the same for men and women.
Right now, the average retiree is getting about $14,000 a year from Social Security. To buy a similar income stream on the open market, a 66-year-old would have to pay about $250,000. Someone getting the maximum benefit, $28,000 a year, would need to pay about $500,000.
http://finance.yahoo.com/focus-retirement/article/111640/could-you-retire-without-social-security?mod=fidelity-readytoretire&cat=fidelity_2010_getting_ready_to_retire
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