As you plan your retirement, how much should you expect to receive from Social Security? While you can estimate your Social Security benefit amount, unless you intend to retire soon, you cannot know your exact monthly benefit amount. Statistics show that you will likely need more retirement income than Social Security provides.
Use these tips to maximize your Social Security benefits.
Estimate Social Security Earnings
The Social Security Administration can give you a projection of your future retirement benefits. The “Retirement Estimator” uses your actual Social Security earnings history to project future benefit amounts, but keep in mind this is just an estimate. Your actual benefit amount may differ if there are changes in the law, or if you experience an increase or decrease in your earnings or cost-of-living.
Find Sources of Income Outside of Social Security
Among current retirees, Social Security benefits represent only about 34% of their income. As of August 2016, the average monthly benefit for retired workers receiving Social Security benefits was $1,350 — or about $16,200 a year. To maintain your current standard of living during retirement, you will need other sources of income.
Contribute to an employer-sponsored retirement plan or an individual retirement account (IRA). These options provide tax benefits and help build your financial resources for retirement. Investments held outside of tax-advantaged plans also can be a good source of retirement income.
When To Start Collecting Social Security
The age you start collecting Social Security benefits affects the monthly payments you receive. You can start collecting benefits as early as age 62 or as late as age 70. Your full retirement age is anywhere from age 65 to 67, depending on when you were born. If you elect to receive Social Security before your full retirement age, you permanently receive lower monthly payments. Waiting past your full retirement age increases your monthly benefit. However, once you turn 70, there is no additional benefit to waiting to receive your Social Security benefits. Consider your current health, your family’s history of longevity, and your financial needs before you start collecting.
Contact your Fifth Third Bank financial advisor to discuss your retirement options.