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What Is The Real Value Of Social Security?

The Value of Social Security

Value of Social SecurityRetirement experts say that to protect yourself against inflation and outliving your savings, you shouldn’t plan on spending more than 4 percent of your retirement savings each year. This means if you had $1 million saved, you shouldn’t plan on spending more than $40,000 each year of your retirement.

Now, consider your Social Security annuity.  If you and your spouse are receiving $1,700 a month from Social Security, that’s just over $20,000 a year, which is how much you should be spending if you had $500,000 in retirement savings. If you and your spouse are receiving $3500 a month from Social Security, that is $42,000 a year, which is more than you should be spending from a retirement portfolio worth $1 million.

Not only this, but the amounts you receive from Social Security are also inflation protected and that makes Social Security one of your most important sources of retirement income. You and your spouse have paid into Social Security’s trust fund throughout your working years, so it’s your money and you should treat it as you would any other saving. You can does this by becoming knowledgeable about your benefits and making all decisions carefully.

Making the Most of Your Retirement Benefits

Everyone who receives Social Security checks is interested in how to maximize their benefits. However, when it comes to making the decisions that will increase or reduce the amounts you receive from Social Security, can become very complicated and downright confusing.

In general, the longer you wait to start receiving your Social Security benefits, the higher the amounts you’ll receive.  For example, as a general rule, if you wait until you reach age 70, your inflation protected benefit amount will be 76 percent higher than had you elected to start receiving benefits at age 62.

When you turn 62 years old, you become eligible to start receiving Social Security benefits but, at a reduced level.  Also, depending on the year in which you were born, you become eligible for full benefits at either 66 or 67.  However, the amount of your benefits continues to increase until age 70, after that you’ve hit the max.

Here’s an example for someone born in 1937: for anyone born in 1937 or before, the retirement age is 65.  If someone in this group elects to start receiving their benefits a 62, they’ll only receive 80 percent of their full retirement amount, but if that person had waited until age 70, he or she would have received 132 percent of their fill benefit amount.  The amount of that difference depends on the individual’s specific situation, but it’s always hundreds of dollars a month.

Of course, if you’re in poor health or you simply can’t afford to wait until age 70 to start receiving your benefits, then you can elect to start receiving checks at age 62. Remember, there aren’t any one-size-fits-all solutions where Social Security is concerned.

There are things though, like triggering a spousal benefit for a low-earning partner or suspending your personal benefits until age 70 while you retire at your normal retirement age. There are different rules that impact your benefits, like if you or your spouse is divorced or if one of you is still working through your 70s. 

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