What About Retirement?
This is part three of a series on Social Security. This series is based on information from the Social Security Administration and reviewed by Robert Simons from the Escanaba Social Security office.
A national poll found that 75% of U.S. workers worry about not having enough money to live comfortably in retirement. This percentage is probably even higher among farmers.
A financial advisor’s rule of thumb to clients is that they will need about 70% of pre-retirement income to live comfortably in retirement. Social Security only replaces about 41% of an average wage earner’s salary.
Currently, you can retire at age 62, even if your full-retirement age falls between 65 and 67, but the full-retirement age is increasing for those people born after 1938. If your full retirement age is older than age 65, you can still retire at age 62, but the reduction in your benefit amount will be greater than those folks who reached full retirement age at 65. In addition, if you delay retiring until after your full retirement age, “delayed retirement credits” will boost your monthly benefit amount.
Here’s how it works:
If your full retirement age is 67, the reduction for starting your benefits at age 62 is about 30%. It’s 25% at age 63, 20% at age 64, 13⅓% at age 65 and 6⅔% at age 66.
As a general rule, early retirement gives you about the same total Social Security benefits over your lifetime but in smaller monthly payments. You have to take into account the number of monthly payments you will receive during your lifetime. Everyone needs to be aware of his or her retirement figures and check to see what benefits, if any, may be available at age 62.
The only other incomes that may affect your Social Security retirement benefits are wages or self-employment income. Everyone should strive to have other sources of retirement income such as investments, individual retirement accounts (IRAs), personal savings and/or 401(k) accounts, none of which have any impact on your Social Security retirement benefits.
The next part of this series will discuss disability and survivor benefits. For more information, log on to www.socialsecurity.gov or contact your local Social Security office.