Broker Check

Getting Your Government Cheese

| December 12, 2017

When your parents retired, they probably didn't think too much about Social Security. They just went to their local office as soon as they turned 65, or maybe 62 if they retired early, and applied for benefits. They probably took their benefits for granted and didn't ask very many questions. For Baby Boomers….times….they are a-changin’. There are many unknowns and variables when it comes to Social Security. These are our views on the top 4 questions we hear about Social Security.

Will Social Security be there for me? Yes, most likely in some form. Right now, the Social Security trust fund holds about $2.7 trillion, which is invested in special-issue Treasury securities. As baby boomers start retiring, these assets will gradually be drawn down. Over the next 75 years, costs will begin to exceed income. There are enough reserves that the system will be able to pay 100% of promised benefits until 2034. After that, if nothing is done to reform the system, income will be sufficient to cover just 79% of promised benefits.

How much can I expect to receive? It depends on how much you earned over your working career and your age when you apply for benefits. Social Security looks at your annual earnings over your entire lifetime, indexed for inflation, and picks the 35 highest years' earnings to determine your benefit amount. Full retirement age is the age at which you can claim full, unreduced benefits. For anyone born between 1943 and 1954, full retirement age is 66. For those born in 1960 and later, full retirement age is 67. For those born in 1955 through 1959, full retirement age is 66 plus some number of months.

How can I maximize my benefits? There are several strategies to maximize your benefits. You can improve your earnings record or delay the start of benefits. You can also take advantage of spousal and survivor benefits and coordinate Social Security with your overall retirement plan. There are additional variables that can come into play such as delaying benefits until age 70, divorces from marriages that last over 10 years, or death of a spouse.

Will my Social Security payment be enough to live on in retirement? Probably not. Social Security represents about 40 percent of the average retiree's total income, less for high-income people.   It’s important to partner with a trusted advisor to optimize your retirement income needs along with taxes, investments, estate planning, insurance, and the other elements of your financial plan so you can pursue the universal dream of a comfortable, worry-free retirement.

Life’s a journey––navigate it wisely!