Despite the fact that delaying the start of your Social Security benefits until age 70 means a 32% increase in the amount you would receive, only 10% of non-retired Americans between the ages of 60 and 65 plan to waiting for the bigger payout. according to the Schroders 2023 US Pension Survey.
Consider working with one Financial Advisor to ensure you get the retirement income stream that meets your needs.
Why Some Take Social Security Before Full Retirement Age (FRA)
People who wait until they reach full retirement age — which is 67 for anyone born in or after 1960 — will receive an 8% increase in their monthly benefits for each year they delay filing Social Security until the age of 70 years. Over a period of twenty years or more in retirement, the difference equals a significant amount of retirement income.
Despite this, the survey found that 40% of respondents who were still working said they plan to take their Social Security benefits between the ages of 62 and 65, making them ineligible for their Social Security benefits. maximum pension benefits – even though they are aware that waiting longer would mean higher payments for them.
Respondents were more likely to have other concerns: 44% said they were so concerned about Social Security running out of money that they were more likely to file for benefits to maximize the amount of money they would raise. Another 36% said they expect to file for benefits before age 70 because they know they will need the money sooner.
“We have a crisis of confidence in the social security system and it's really costing American workers money,” said Deb Boyden, head of US Defined Contribution at Schroders. “Fear about the stability of Social Security is causing people to walk away from money that could improve their quality of life in retirement. Many don't even wait for their full benefits, let alone the maximum, which means they will have to create more income themselves. , making it even more important to save and invest for your retirement earlier.”
These fears stem from reports that the Trust fund for old-age and survivor insurance (OASI) fund that provides money for social security payments is expected to fall short from 2033. A leading solution cited by experts and supported by the Biden administration is to raise the cap on the payroll taxes that fund Social Security, while some of the Republican lawmakers and some Republican presidential candidates say the solution is to raising the age of eligibility for Social Security benefits, or reducing future benefits for workers in their 20s.
How many people think they should retire
The study also found that non-retired survey participants said they needed an average of $4,940 to enjoy a comfortable retirement. Millennials those still working predicted they would need $5,135 a month, while workers closer to full retirement age, between 60 and 65, said they would need $4,855 a month to feel comfortable. That compares with current retirees who said their total monthly income averages $4,710, including Social Security. However, 37% reported that their total monthly income totaled less than $2,500.
People who had prepared more actively for their retirement reported a higher average retirement income. Overall, the study found that the average monthly income for retirees with a financial advisor, including Social Security, was $5,075. And for retirees with a formal financial plan, their monthly income averaged $5,810, nearly twice as much as the $3,000 per month in income reported by those who retired without a retirement plan. financial plan.
In short
When predicting the income you'll need in retirement, consider your current cost of living, debt levels, where you'll live, whether you'll downsize your living situation, and other elements of your desired lifestyle if you retires. To be comfortable, most people need their own savings and investments, as well as their Social Security benefits.
Tips about social security
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Consider joining the conversation a financial advisor on how to get the most out of Social Security in your retirement plan. Finding a financial advisor does not have to be difficult. SmartAsset's free tool connects you with up to three vetted financial advisors serving your area, and you can have free introductory calls with your advisors to decide which one you think is right for you. If you're ready to find an advisor who can help you achieve your financial goals, start now.
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