Get To Know Social Security

Even if you’re not retiring any time soon, it’s good to learn about Social Security in order to better plan for your retirement. For example, Social Security is critical to most people. According to the Social Security Administration (SSA), among retired seniors, “50% of married couples and 70% of unmarried persons receive 50% or more of their income from Social Security” — and “21% of married couples and about 45% of unmarried persons rely on Social Security for 90% or more of their income.”

The average monthly Social Security retirement benefit was recently $1,516— not quite $18,200 annually. If your earnings were greater than average, you can expect more than that, and vice versa. The maximum monthly benefit for 2020 is $3,790, or roughly $45,500 per year.

Each of us has a “full retirement age,” at which we’re eligible to start collecting our full Social Security benefits. For most of us, it’s 66 or 67. You can start collecting as early as 62, though, and you can delay starting until age 70.

Starting to collect your benefits early will make your checks smaller, but you’ll get more of them. Your checks will grow by about 8% for each year beyond your full retirement age that you delay starting to collect, up to age 70. So delaying from age 67 to 70 can boost your benefits by about 24%.

You’ll see stories in the news about how Social Security is “running out of money.” What’s happening is that the ratio of workers paying into the system to beneficiaries collecting benefits has been shrinking over time.

Social Security ran surpluses for many decades, but if Congress doesn’t bolster it, it will start to run a deficit. Taxes will still be collected, though, so Social Security won’t run out of money. But without a strengthened program, retirees may end up receiving only about 76% of what they’re entitled to. There are many ways to shore up the program, so consider letting your representatives in Washington know if you’d like them to take action.