Retirement and Social Security Benefits: What Baby Boomers Need to Know

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Income from Social Security­ benefits plays an incredibly important role for many Americans in retirement. In 2015, 85% of married couples and 84% of non-married persons aged 65 or older received Social Security benefits.

In 2016, 66 million people received benefits from programs administered by the Social Security Administration, including the 5.5 million people who were newly awarded benefits.[1]

Unfortunately, too many Americans rely solely on Social Security for their income in retirement. In 2015, Social Security provided at least 50% of total income for 50% of couples receiving Social Security benefits and 71% of non-married beneficiaries. More surprisingly, it provided 90% or more of income for 23% of couples and 43% of non-married beneficiaries.[2]

As members of the post World-War II Baby Boomers generation (born between 1946-1964) leave the workplace and enter retirement, the amount of people claiming Social Security benefits is expected to double over the next 50 years. With the birth rate low and people living longer, it is also projected that the ratio of 2.8 workers paying Social Security taxes to each person collecting benefits in 2016 will fall to 2.1 to 1 in 2036.[3]

How Can Baby Boomers Maximize Their Social Security Income in Retirement?

Social Security benefits are available to qualified workers beginning at age 62. However, your benefits at age 62 are 75% of what they would be if you delayed taking benefits to your full retirement age, which is somewhere between age 66 and 67 for Baby Boomers. If you wait to collect benefits until age 70, your benefits will be approximately 132% of what you would have received at full retirement age. But due to Social Security’s complex rules, 70% of Americans take benefits early, leaving several thousand dollars over their lifespan on the table. For example, a couple with monthly benefit amounts of $1,200 and $600 monthly can expect to receive approximately $125,000 more over their combined lifetimes by optimizing their claiming strategy. [4]

Because so many people rely on Social Security benefits in retirement, it’s important to have a plan for maximizing your benefits. The decision should not be made in a vacuum and you need to understand that your plan will not only impact your lifetime benefits, it will also impact the surviving spouse’s survivor benefits.

It’s also important to coordinate the timing of benefits across all income sources – Social Security, 401(K) and IRA distributions, pension benefits, and transfers from your savings accounts. Maximizing your Social Security benefits means you’ll be less reliant on your savings accounts for income in retirement which will help protect against longer than planned life expectancies.

After contributing to Social Security for your entire career, why not get the most of the money you put into the system?

Talk to your Advisor and develop your customized Social Security optimization plan today!


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