Most of us count down the days, months, and even years in anticipation of Social Security starting. In fact, besides becoming eligible for Medicare, perhaps the retirement event many people look forward to the most may be the day they start receiving these benefits.
The lyrics of the song come to mind:
expectations. Please look forward to it… I’ll keep you waiting. It keeps me wai ay ay ay ay a ya tin
carly simon
But today’s retirees are overly reliant on Social Security, and their benefits may start too early. The desire to retire early is a temptation that is difficult to resist. And you probably want to start Social Security as soon as possible. But they have plenty of reasons to yip, yip, yip.
Social Security is designed to replace only a small portion of pre-retirement income
According to Social Security Administration (SSA), “Social Security benefits are the foundation for building a secure retirement.”
However, the SSA advises that this salary is designed to only replace approximately 40% of the 70% of your pre-retirement income. (Social Security requires only 70% of your pre-retirement income and assumes post-retirement benefits are only about 40% of that income.)
So if you earned $50,000 a year before you retired, and you plan to spend $35,000 a year in retirement, Social Security is designed to cover 40% of your income needs, or $14,000.
If you earn more than the average, you should plan to replace less than 40% of your required retirement income with Social Security, sometimes much less. For example, if you earned $150,000 before you retired, your estimated monthly Social Security amount would be $2,000 to $3,000 per month, or $36,000 per year.
If your income is less than average, Social Security may be able to slightly supplement your income needs.
In reality, most retirees receive a much higher percentage of their income in Social Security.
According to the Social Security Administration Fast facts about 2024Many seniors are too dependent on Social Security benefits. They report: Among older Social Security recipients, 37% of men and 42% of women receive benefits.
More than 50% of my income comes from Social Security.
What’s worse? 12% of men and 15% of women rely on Social Security for more than 90% of their income.
It will be better if you can maintain it Wai, ai, ai, ai, ai, ai, ting
According to the report, Boston University Retirement Research Center According to an analysis by the Social Security Administration, more people are currently waiting to file a Social Security claim.
However, the majority argue that before reaching full retirement age, around age 66:
- At age 62, 31% of women and 27% of men reported
- 6% of the total population declares at age 63
- 7% of women and 6% of men filed at age 64
- 10% charged at age 65
- 36% of men and 31% of women filed at age 66
Reason for waiting
Depending on your income history and when benefits start, applying early could mean giving up. $100,000 You’ll get even more benefits over your lifetime. 100,000 dollars! That’s a lot of money!
Whether you wait to start receiving Social Security depends on several factors, including your health, financial needs, and life expectancy. Here are some important considerations to help you decide whether it’s better to wait.
1. higher monthly stipend
If you delay enrolling in Social Security past your full retirement age (FRA), your benefits will increase by about 8% per year until age 70. If you live long enough to break even, this can significantly increase your monthly income.
2. longevity
If you expect to live longer than average, it may be advantageous to wait because it will maximize your lifetime Social Security benefits. The break-even point, where delayed gains catch up with earlier, smaller gains, often occurs in the early 80s.
3. Current income needs
If you need money now to cover living expenses or reduce debt, starting earlier (at age 62) may be a practical choice. However, this can reduce your monthly benefits by up to 30% compared to waiting until FRA.
4. Consideration for health
If you are in poor health or have a family history of a short life expectancy, it may make sense to start Social Security early because delayed payments may mean you won’t live long enough to benefit. There may be.
5. Tax implications
Depending on your other income, up to 85% of your Social Security benefits may be taxable. By waiting and allowing other assets to generate income first, you may be able to manage your tax situation more efficiently.
If married, at least one of you must wait to claim
Delaying benefit payments is a good Social Security decision for everyone. The longer you delay starting payments, the more money you’ll receive each month.
However, if you are married, there may be an additional incentive to delay benefits. If one spouse dies first, the surviving spouse will choose which Social Security benefits they receive. (Surviving spouses are only entitled to one benefit, not both.)
Rule of thumb: If you are married and want the best for your spouse, there are simple rules to follow. That means the highest-earning member of the couple should delay starting benefits as long as possible until age 70, the maximum retirement age. There is no need to focus on who is who. I’m older. Or who will retire first? The key is to ensure that the highest earners receive the highest possible dividends.
Social Security is the only way to enjoy a secure retirement
Today’s retirees are probably overly reliant on Social Security benefits, but there are many options for achieving a secure retirement plan independent of Social Security.
Boldin Retirement Planner can help you find opportunities. Consider options like cutting expenses, leveraging your home equity, or working a little longer and immediately see the impact on your current and future finances. This tool was named the best retirement calculator by the American Association of Individual Investors (Ahhh). Forbes magazine calls this a “new approach to retirement planning.”
This tool includes Social Security Explorer, which makes it easy to see how to make the most of your Social Security benefits.
But if all else fails, you may want to consider these 11 ideas for living off Social Security alone in retirement.
