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Planning your retirement strategy? Wondering where your income will come from in retirement? It’s likely that Social Security will be part of the mix. More than 90% of Americans age 65 and older receive Social Security benefits. In fact, for 48% of married elderly couples and 69% of unmarried seniors, Social Security represents more than half their income.¹
The average retiree receives $1,461 per month from Social Security.¹ While that’s a significant amount, it’s likely not enough to support a full retirement. If you’re like many retirees, you’ll need income from sources besides Social Security.
How much of a role will Social Security play in your retirement? And how much additional income will you need? To answer those questions, it’s helpful to know how your Social Security benefit is calculated.
How much can you expect from Social Security?
The Social Security Administration can provide an estimate of your benefit amount. It’s driven by your career earnings and your age at the time you file. Generally, everything else being equal, higher career earnings lead to a higher benefit amount. However, your age at the time you file for benefits also plays a major role.
You are eligible to receive your full benefit when you reach your full retirement age (FRA). Most people have an FRA between their 66th and 67th birthdays. You can file as early as age 62. However, your benefit could be reduced by as much as 30% if you file before your FRA.²
You can also delay your filing past your FRA and increase your benefit amount. Social Security credits your benefit by 8% per year for every year you delay your filing past your FRA. This credit is offered up to age 70.³
Again, Social Security can offer an estimate of your future benefits. Also, a financial professional can help you determine how Social Security fits into your retirement strategy. You may not be able to control your career earnings, but you can maximize your benefit by carefully planning the timing of your filing.
How else can you generate retirement income?
Even if you delay your Social Security and maximize your benefit amount, it’s likely that you will need some other form of income. Perhaps you have a defined benefit pension through your employer. Or maybe you can take withdrawals from your 401(k) or IRA.
You also may want to consider an annuity with a guaranteed* income benefit. These are tax-deferred vehicles in which you can potentially earn interest. However, many annuities also offer optional guarantees* that provide a guaranteed* income stream for life. No matter how long you live or how your annuity performs, you still receive income. That kind of guaranteed* cash flow could supplement your Social Security benefits and provide financial stability in retirement.
Ready to plan your income strategy in retirement? Let’s talk about it. Contact us at Cornerstone Financial. We can help you analyze your needs and develop a plan. Let’s connect soon and start the conversation.
1 | https://www.ssa.gov/news/press/factsheets/basicfact-alt.pdf
2 | https://www.ssa.gov/planners/retire/retirechart.html
3 | https://www.ssa.gov/planners/retire/delayret.html
*Guarantees, including optional benefits, are backed by the claims-paying ability of the issuer, and may contain limitations, including surrender charges, which may affect policy values.
Licensed Insurance Professional. This information is designed to provide a general overview with regard to the subject matter covered and is not state specific. The authors, publisher and host are not providing legal, accounting or specific advice for your situation. By providing your information, you give consent to be contacted about the possible sale of an insurance or annuity product. This information has been provided by a Licensed Insurance Professional and does not necessarily represent the views of the presenting insurance professional. The statements and opinions expressed are those of the author and are subject to change at any time. All information is believed to be from reliable sources; however, presenting insurance professional makes no representation as to its completeness or accuracy. This material has been prepared for informational and educational purposes only. It is not intended to provide, and should not be relied upon for, accounting, legal, tax or investment advice. This information has been provided by a Licensed Insurance Professional and is not sponsored or endorsed by the Social Security Administration or any government agency.
19151 - 2019/8/19
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