Saving for Retirement Social Security
Social Security (SS) is not saving for retirement in the traditional sense, not like a 401K, Roth IRA, etc., but it is an important piece of the overall plan and strategy. My view of SS has changed over the years. What I recall as a youngster, pre-teen years, is my Grandmother trying to get by on a small SS benefit. It seems all I ever heard growing up about SS is that it is not enough and good luck getting anything at all by the time you are eligible. The beating of that drum over the years left me with a somewhat dim view of what SS is and what it might or might not provide in the way of benefits.
And now, all of these years later, not much has changed. We still hear people saying it is not enough and we still hear how lawmakers are going to address and fix SS, but mostly the same old rhetoric. In part due to the negative tone and its uncertainty, I decided that SS would be a bonus for me, not something on which I relied. I figured if it is there when I am eligible (which is getting close now), no matter the amount, I will be grateful and include it as a piece of my overall retirement. I placed my focus instead on saving as much as I could for retirement so my reliance on SS became less and less.
I do recognize its importance for so many Americans. For some, it might be the only regular money they receive each month or at least the majority of the money they receive. For the average American, SS accounts for roughly 40 percent of their retirement income. For this reason, and others, the timing for when you begin receiving your SS benefit is very important. For some people, due to health reasons or other reasons, they feel they cannot wait beyond their first year of eligibility, which is usually age 62. If you wait until what is called Full Retirement Age (FRA), which for most of us now is age 67, you will gain about 30 percent more in the way of your benefit. To illustrate this, if you were eligible for a monthly $1K benefit at age 67 or FRA, that benefit at age 62 would be about $700 monthly instead. On the other end of the decision spectrum, if you can wait until age 70, you will gain an addition 8 percent for each year you wait. So, if FRA is 66, waiting to take your benefit until age 70 will net you 32 percent (8% x 4) more in benefits. If FRA age is 67, then it will be 24 percent more.
There is a lot to talk about when it comes to SS. The options are almost dizzying. You will certainly need to call the SS Administration as you near that decision. In the meantime, start a conversation, what questions do you have for me?