Social Security is the backbone of most retirement plans, but there are still a lot of misconceptions about it. If you don’t understand Social Security in its entirety, or have unrealistic expectations for it, you could end up disappointed (and unprepared) in the long run.
Below are the top five things about Social Security a lot of people don’t know. We hope that by clearing up this information, you can work with your financial advisor in NJ to create a robust retirement plan that meets your needs and goals.
Social Security is not meant to be your primary source of income.
Many people in New Jersey rely on Social Security to get them through their retirement years, but this isn’t what these benefits are meant for. Social Security was meant to replace about 40% of pre-retirement income for average earners. The purpose of this money is to cover necessities rather than an entire lifestyle.
Heard that Social Security is going bankrupt? Changes are being made to prevent this from happening.
It’s estimated that the Social Security trust fund reserves will be depleted by 2034. Fortunately, the government is working on making changes to the program to prevent this from happening. While nothing is set in stone, several solutions have been proposed such as:
The age you start taking your benefits makes a difference.
Many people are surprised to learn that the age they start taking their benefits matters. You become eligible for Social Security at 62 years of age, but you won’t receive your full benefits until you are 66 or 67, depending on the year you were born. If you start taking your benefits at 62, you will receive reduced payments. If you want to maximize your benefits, it’s best to wait until you’re closer to full retirement age.
Social Security is more than a retirement program.
Aside from providing retirees with supplementary income, Social Security also supports veterans, widows and dependent children of deceased or disabled workers. If you believe that you are eligible for any of these benefits, contact your local Social Security office. This program can be used strategically for various situations.
The average Social Security benefit is $1,503 (in 2020).
For the average American, receiving a monthly check from Social Security leaves them with just $18,036 in annual income. That’s only about $5,000 above the federal poverty level for a single person - and certainly not enough for most retirees to live off of. Most financial experts suggest having 70% to 80% of your final salary to maintain your quality of life. This is why saving for retirement early on is crucial.
Are you surprised by any of these Social Security facts? To learn more about your benefits, when to take them and how to continue saving for retirement, contact Leonard Financial Solutions today.
Below are the top five things about Social Security a lot of people don’t know. We hope that by clearing up this information, you can work with your financial advisor in NJ to create a robust retirement plan that meets your needs and goals.
Social Security is not meant to be your primary source of income.
Many people in New Jersey rely on Social Security to get them through their retirement years, but this isn’t what these benefits are meant for. Social Security was meant to replace about 40% of pre-retirement income for average earners. The purpose of this money is to cover necessities rather than an entire lifestyle.
Heard that Social Security is going bankrupt? Changes are being made to prevent this from happening.
It’s estimated that the Social Security trust fund reserves will be depleted by 2034. Fortunately, the government is working on making changes to the program to prevent this from happening. While nothing is set in stone, several solutions have been proposed such as:
- Raising the full retirement age
- Raising the amount of income subject to Social Security tax
- Raising Social Security tax
- Reducing cost-of-living adjustments
- Reducing benefits
The age you start taking your benefits makes a difference.
Many people are surprised to learn that the age they start taking their benefits matters. You become eligible for Social Security at 62 years of age, but you won’t receive your full benefits until you are 66 or 67, depending on the year you were born. If you start taking your benefits at 62, you will receive reduced payments. If you want to maximize your benefits, it’s best to wait until you’re closer to full retirement age.
Social Security is more than a retirement program.
Aside from providing retirees with supplementary income, Social Security also supports veterans, widows and dependent children of deceased or disabled workers. If you believe that you are eligible for any of these benefits, contact your local Social Security office. This program can be used strategically for various situations.
The average Social Security benefit is $1,503 (in 2020).
For the average American, receiving a monthly check from Social Security leaves them with just $18,036 in annual income. That’s only about $5,000 above the federal poverty level for a single person - and certainly not enough for most retirees to live off of. Most financial experts suggest having 70% to 80% of your final salary to maintain your quality of life. This is why saving for retirement early on is crucial.
Are you surprised by any of these Social Security facts? To learn more about your benefits, when to take them and how to continue saving for retirement, contact Leonard Financial Solutions today.
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