When I first started in the financial services industry nearly 15 years ago, I used to joke that Social Security wouldn’t be around for much longer. At that point in time I had zero clients who were retired. Currently, I have nearly 40 clients who are retired and every month receive a check from the Social Security Administration averaging a “net” $3,500 that gets deposited into their account. This is real money, crucial for living, and money that oftentimes has to last an individual for over 30 years.
Your decision to retire will be one of the most important decisions you’ll make in your lifetime. It is important to know all the facts about Social Security and what the best decisions for YOU are, including the best time to retire. Typically, the best time for an individual to retire is when they are at their FRA (full retirement age). To find out your FRA, please see the steps below:
Top Facts to Know about Social Security
1. Social Security replaces only about 40% of an average wage earner’s income after retiring.
2. Social Security is for more than retirement.
3. Higher lifetime earnings result in higher benefits.
4. The age at which full retirement benefits are available gradually increase up to age 67. If you decide to delay your receiving benefits, your benefits will be increased a certain percentage, depending on when you were born. (Vice versa)
5. Cost-of-living adjustments (COLA) are incorporated into Social Security earnings to counteract the effects of inflation. To put it simply, if inflation is not high or consumer prices increases drop, social security recipients do not receive a COLA.
* To read more on the different areas regarding Social Security and the top facts you will need to know, please click here.
What to Consider When Planning:
1. Your complete wage history
2. Desired retirement age
3. Estimated life expectancy
4. Inflation & COLA
5. Other sources of income (qualified accounts & non-qualified accounts)