Social Security: Figuring out retirement
April 8, 2011
For almost every American worker, Social Security is “part of the plan” for a secure retirement. If you are among the roughly 95 percent of workers in the U.S. who are covered under Social Security, here’s a primer on retirement coverage.
When you work and pay Social Security taxes, you earn “credits” toward Social Security benefits. If you were born in 1929, or later, you need 40 credits or 10 years of work to qualify for retirement benefits.
Your benefit amount is based on how much you earned during your working career. A worker with average earnings can expect a retirement benefit that replaces about 40 percent of his or her average lifetime earnings. Social Security was never intended to be your only source of income when you retire. You also will need other savings, investments, pensions, or retirement accounts to live comfortably when you retire.
Your benefit payment also is affected by the age at which you decide to retire and begin receiving benefits. If you were born from 1943 to 1960, the age at which full retirement benefits are payable increases gradually to age 67.
You can get Social Security retirement benefits as early as age 62 but if you retire before your full retirement age, your benefits will be reduced, based on your age. If you retire at age 62, your benefit would be about 25 percent lower than at full retirement age. You may choose to keep working even beyond your full retirement age. If you do, you can increase your future Social Security benefits – up until age 70.
Choosing when to retire is an important decision, but it’s also a personal choice you should carefully consider. Social Security offers a list of factors to consider in the publication “When to Start Receiving Retirement Benefits” at http://www.socialsecurity.gov/pubs/10147.html. In addition, Social Security provides an online “Retirement Estimator” to get immediate and personalized retirement benefit estimates to help you plan. The Retirement Estimator is a convenient and secure financial planning tool, allowing you to create “what if” scenarios. Check it out at http://www.socialsecurity.gov/estimator.
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When you’re ready, you can apply online for retirement benefits at http://www.socialsecurity.gov or call our toll-free number, 1-800-772-1213 (TTY: 1-800-325-0778). You can make an appointment to visit any Social Security office to apply in person.
kathy petersen is a public affairs specialist for social security, denver region. you can write her c/o social security administration, 605 main, suite 201, rapid city, sd, 57701 or via e-mail at firstname.lastname@example.org. next week kathy explains how social security does their part to celebrate earth day.