One of the steps in the financial planning process for my clients is to create their account on the official Social Security website and learn what their estimated benefits are based on their reported work record.  I know they send out the annual statements, but sometimes we move, and the Social Security administration doesn’t catch up with us for a while.  Or we forget where the heck we put that statement.  Or we just plain don’t care because it seems too far down the road and we pitch it.  It’s good to be able to get back to those numbers at any time, and I encourage you to know what yours are.

Most people are shocked at how little it is when they do find out.  The estimated average monthly benefit for “all retired workers” in 2019 is $1,461.  That works out to be $17,532 per year.  It’s not a small amount, but it’s certainly not enough to keep up with the cost of living in many urban areas.

Many pre-retirees do not know that claiming your SS benefit early (before your full retirement age) or delaying your claim can have a dramatic effect on the monthly benefit you receive.  Starting your benefits at age 62 can reduce them by as much as 30% for the rest of your life.  Delaying your benefit until age 70 can increase your benefit by as much as 24%.  So that 2019 average benefit of $1,461 would be cut to $1,022.70 for the worker who claimed at age 62 and increased to $1,811.64 for the person who delayed claiming until age 70.

Luckily, today we have many tax-advantaged ways to save for retirement.  If your employer offers a retirement savings plan, take advantage of the ease of that savings vehicle which often includes some contribution made by your employer (free money!).  If you do not have an employer plan, you can set up your own Individual Retirement Account (IRA).  If you are self-employed and/or a small business owner, you have multiple options for retirement savings vehicles.

Any way you cut, if you don’t think the monthly benefit listed on your SS profile will cut it for your retirement income, drop me a line and we can talk over some strategies to get you moving in a better direction.

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