The ages of 66 and 67 are significant because they are the ages at which many people will be able to begin collecting Social Security retirement benefits now and in the future – 65 was formerly the full retirement age.
According to the Social Security Administration, roughly nine out of ten persons aged 65 and over get these payments, and the number of people aged 65 and up is growing.
According to the SSA, the number of persons aged 65 and over will rise from roughly 56 million to over 78 million by 2035.
Once you turn 65, you may expect to live a little over 20 years, so it’s critical to maximize your Social Security payout. Here’s how to get the most out of your Social Security payout and how much you may expect to get, according to financial experts.
How Much Will Social Security Benefit the Average Senior Citizen?
According to AARP, an individual can earn a monthly maximum benefit of $3,148 at full retirement age (now 66 years and 2 months) in 2021, and a monthly maximum benefit of $3,895 at age 70.
The ordinary older adult, on the other hand, may expect to get far less from Social Security. In July 2021, the average monthly Social Security payout for retired employees was only $1,556.72, according to the Social Security Administration.
“It’s vital to know that your monthly Social Security income is determined by years worked when you receive, and other criteria. “Everyone’s Social Security benefits are different,” said John Hill, president, and CEO of Gateway Retirement.
What Does the Social Security Benefits Expected Mean for a Secure Future?
Wilson Coffman, owner of Coffman Retirement Group in Huntsville, Alabama, explained that Social Security was designed to replace just 40% of pre-retirement wages.
“The funds used to pay Social Security payments have been running low, and forecasts indicate that they will run out by 2035. Creating several income streams to replace the remaining 60% of pre-retirement wages is critical.
Place retirement assets, such as IRAs and 401(k)s, in fixed index funds with income rider options or other annuity products that generate income streams, as examples.”
What Are Some Social Security Benefit Maximization Tips?
“While navigating Social Security income might be difficult, there are techniques to help you optimize your benefits,” said Greg Middendorf, CFP, of HCM Wealth Advisors. Middendorf’s advice is as follows:
1. Work for at least 35 years: “When calculating your benefit, the Social Security Administration looks at your average monthly salary over your 35 highest-earning years,” Middendorf explained. “You can still get checks if you didn’t work for that long, but the amount may be disappointing.” Zero-income years are included in the benefit computation for those who haven’t worked for at least 35 years, and even one of them can considerably diminish your payments.”
2. Review your revenue history: “[Do this] at least once a year to ensure that everything looks to be correct,” he said. “Keep in mind that the values shown there represent what you’ve paid in Social Security taxes on, which isn’t usually the same as your income.” For example, in 2021, you will only have to pay Social Security taxes on the first $142,800 you earn. This figure was lower than in previous years. As a result, high earners may discover that their earnings record does not accurately reflect their income, although it may still be correct.
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“If you find a mistake, you may file a Request for Correction of Earnings Record form with the Social Security Administration, together with any papers you have that substantiate your income for that year,” Middendorf said. “The Social Security Administration will review your request and, if necessary, amend your earnings record.”
3. Consider your benefit age: “You may claim Social Security as soon as you reach 62, but you must wait until your full retirement age (FRA) if you want the full amount you’re entitled to based on your work history,” Middendorf advised. “For those born between 1943 and 1954, that’s 66.” Then, for individuals born in 1960 or after, it climbs by two months per year until it reaches 67.
“Every month you get benefits before this age, your payments are reduced by anywhere from 5/12 of 1% to 5/9% of 1% every month.” It may not appear to be much at first, but it adds up over time.
If their FRA is 67, or 75 percent if their FRA is 66, those who begin Social Security at the age of 62 receive just 70% of their maximum income every check.
“However, this process may also be reversed. Delaying benefits beyond your FRA boosts your monthly checks by 2/3 of 1% every month until you reach the age of 70.
Your checks will no longer grow after that. An FRA of 67 can collect up to 124 percent of their entire benefit every check, while an FRA of 66 can get up to 132 percent.”
Aside from Social Security, How Much Money Should You Save for Retirement in Advance?
“There are many elements that go into determining how much money you’ll need to retire,” Coffman explained. “How much does each household spend on living expenses?” The most significant outlay is health care, followed by travel within the first five years of retirement.”
“A common rule of thumb for retirement planning is to have at least 80% of your yearly pay generated at work,” said Justin Nabity, CFP, founder and CEO of Physician’s Thrive. “Replacement income is a term used to describe this.
If you make $100,000 each year at work, you’ll need at least $80,000 to retire. This is the first step. To get the minimum total amount required, multiply this figure by your average life expectancy after retirement. Anything beyond that, and you’re typically in good financial shape.”