Planning for retirement often emphasizes financial stability, and that makes sense. We can’t very easily enjoy retirement if we are stressed about money. Sufficient financial resources allow us to feel secure about the future — and the legacy we’ll leave behind. A solid financial base also lets us do all those things we’ve dreamed of: volunteer, travel, golf, spend time with grandkids.
Before you make plans to retire, be sure to add up all of your sources of income. These might include savings, retirement funds, Social Security and pensions. For many people, much hinges on when they choose to begin collecting Social Security and, of course, the amount of the monthly benefit check.
Did you know that Social Security comprises about 33 percent of older Americans’ income? Nearly 90 percent of American 65 and older are receiving Social Security benefits. AARP offers this handy calculator to help you decide whether it makes sense to begin collecting benefits when eligible at age 62 or to wait until age 70 — or some time in between.
Making the right decisions about Social Security can make a huge difference in your future quality of life, so even if you never learn anything else about it, remember these two things:
You don’t have to claim Social Security benefits at 62. While this is the most popular age to start collecting Social Security, waiting until full retirement age will increase your monthly benefit by as much as 30 percent. (The Social Security Administration sets your “full retirement age” based on when you were born.) Holding out until age 70 boosts your payments by even more.
Here’s an example of how waiting would affect the amount of the monthly benefit for a person turning 62 this year:
- Starting at age 62, $953/month
- Starting at full retirement age, 66 and 4 months, $1,300/month
- Starting at age 70, $1,681/month
There’s more to Social Security than just your own retirement benefit. There are spousal and survivor benefits, too, and you may be eligible if you’re married, divorced or widowed. These benefits can sometimes be more than what you would receive based on your own working record, so it pays to find out if you qualify. Consider working with a financial advisor or accountant to make sure you choose the option that will give you the highest benefit amount possible.
The more you know about the program, the better you can position yourself for a comfortable retirement.