Wondering what you need to know about Social Security and retirement?
The questions, perspectives and implications regarding Social Security and retirement are countless and varied. Here are a few basic things to understand when it comes to Social Security and retirement, according to Forbes.
Recognize that the average Social Security benefit doesn’t represent everyone.
How much can you expect to receive from Social Security? While an average number thrown around is that Social Security will replace approximately 40% of your pay, that’s not the case for everyone. Social Security runs on a progressive benefits formula. This means that the more you earn, the lower the percent that Social Security benefit checks cover. For example, someone earning half the average wage will see Social Security cover 60% of their pay, not adjusting for tax, according to OECD’s Pensions at a Glance calculations. Meanwhile, someone earning twice the average wage can estimate that Social Security will cover 37% of their pay.
Your Social Security benefits are greater the longer you wait.
Experts calculate the previously mentioned OECD values based upon an individual’s full retirement age. However, no matter what this full retirement age is, Social Security offers greater benefits for older retirees. In fact, waiting until age 70 to start receiving Social Security means a benefit level that is 75% higher than beginning at age 62.
Continuing to work to supplement Social Security benefits may not be possible in every scenario.
The average retirement age is increasing, and many people plan to continue to work well into their later years. However, physical health, family circumstances and the job market may prevent some older Americans from doing so. This means that seniors can aim to continue their careers, especially as it’s proven to be beneficial for physical and mental health, but there needs to be an alternate plan.
Keeping these key items in mind in terms of Social Security and retirement may benefit seniors in the long run.