Erickson Financial Solutions Blog
Social Security and Retirement Planning
Social Security retirement benefits have been around for decades. Mistakenly, many have thought it would cover their costs in retirement. Sadly, this is highly unlikely, but it does not mean to ignore the potential benefits.
For most people, the normal social security age is greater than sixty-six years of age. This is age has been creeping upward from sixty-five for years in an attempt to keep the system solvent. Unfortunately, this age adjusting will not be enough, so there will be changes in the future on the benefits or the timing of those benefits.
For many, the current payout is a substantial part of their retirement income plan. Everyone needs to figure-out how they will pay for the difference between the cost of retirement and the shortfall of social security.
One variable is to delay retirement. This has the advantage of delaying the depletion of your asset “nest-egg.” It may also keep you on a medical plan one extra year. If you simultaneously delay retirement and drawing Social Security Benefits, the government actually raises the amount they pay to you by more than 7% each year you delay until age 70.
Drawing social security benefits early is rarely a good idea. First, the payout is lower – forever lower. Second, if you are still working, your benefits might be reduced depending upon how much you make. The more you make at a job, the less Social Security will pay out until you quit working or reach your normal retirement age.
Depending upon your marital status and income level, social security can be tax exempt or nearly fully subject to income tax. It is something to consider.
Social Security retirement benefits are here today and an integral part of millions of American’s retirement plan. However, it will change, and unlikely for the better, so make plans to self-support you retirement in a greater way than former generations.