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The average social security benefit for retired workers is $ 1,417.22 per month in September 2018. This represents a total of just over $ 17,000 a year. Until this will take you depends on the cost of your living expenses. The Social Security Administration says the program is supposed to replace about 40% of pre-retirement income for average employees, but it can cover more or less than that for you, depending on your pre-retirement earnings.
If you were hoping for a little more help from the government for retirement, that's good news. You can do some things to strengthen your social security checks and ease the burden of your own retirement savings. I will discuss this below, as well as reasons why you should not rely too much on social security.
Source of the image: Getty Images.
How social security benefits are calculated
Your social security benefit is based on your average monthly salary during the 35 most lucrative years of your life. If you have not worked for 35 years, the zeros will then be counted in your score, which will significantly reduce the average. So, one of the easiest ways to increase your benefits is to make sure you work at least 35 years. Plus, it's even better because your low income years will then be replaced by years of higher earnings, which will help increase your average.
You can start claiming Social Security at age 62, but you will not get the full amount of your benefits if you start earlier. You do not qualify for all of your scheduled benefits until you reach the retirement age. It's 66 or 67, depending on your date of birth. If you start at age 62 and have reached retirement age at age 66, you will receive only 75% of the amount of your benefits by check. Those who have reached the age of retirement at age 67 will receive only 70% by check.
If you want the maximum amount of the benefit by check, consider delaying Social Security after your retirement age. If you wait until the age of 70 to start applying, you will be entitled to 124% of the amount of your expected benefits if your retirement age is 67 or 132% if your retirement age is 66 years old.
The uncertain future of social security
You may have heard rumors that Social Security is going bankrupt. This is not true, but it is true that the trust funds of the program should exhaust their reserves by 2034, unless changes are made. No one knows for sure what these changes will look like, but it is possible to reduce benefits, raise the retirement age and reduce the program's cost of living adjustments, making it more resilient. to inflation. If any of these ideas materialize, social security could lose some of its value and retirees will have to rely even more on their own retirement savings to cover their expenses.
It is essential that you understand how much you need for your retirement and that you regularly contribute to your retirement accounts in order to stay on track. Once you have estimated your retirement expenses, you can subtract what you expect from social security to determine how much you need to save on your own. You can use the above average as an estimate or create a my Social Security account to get a clear idea of the amount of your social security benefit based on your work history.
If you want to be on the side of security, you should aim to save a little more than you think you need if the value of social security decreases. But the program will not go away. If you take the steps I mentioned above to increase your benefits and you save yourself, you will not encounter any problem to cover your retirement expenses.
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