Saying that Social Security is complicated is like saying that the sun is hot. While it’s quite obvious that the entire Social Security system is extremely complicated, the fact is that as a consumer it’s vital that you know everything you can possibly know about how it works and what your benefits are in order to be able to take the most advantage of those benefits.
The fact is, even if you do know all of this information, it can still be difficult to make the best decisions when it comes to Social Security, your future and your family.
The following 5 Facts about Social Security, and how it affects you and millions of other Americans, are vitally important to know and know well. Although many assume that Social Security will be there when they need it, that isn’t exactly true. Knowing the 5 Facts below will be extremely helpful when it comes time for you to make choices about your social security benefits. Enjoy.
Fact #1: Most elderly people in America rely on Social Security heavily
9 out of 10 people 65 years of age or older are already receiving Social Security benefits. In fact, Social Security is the major source of income for most American seniors and comprises nearly 40% of their income. Nearly half of all elderly married couples and almost ¾ of elderly single people receive at least 50% of their income in retirement from Social Security.
Fact #2: Social Security is a massive system
This year nearly 60 million Americans, including almost 40 million retirees, 9 million dependents and 11 million disabled workers, will receive Social Security benefits.
Fact #3: The American workforce is slowly shrinking
While this might not seem to be something to get alarmed about, the fact is that the demographics on the American workforce are not good. Here’s why; back in 1950 every Social Security recipient was supported by 16 workers. By 1960 that had fallen to five workers per Social Security recipient. It’s predicted that, by 2033, every retiree receiving Social Security benefits will be supported by only 2.1 workers.
Fact #4: The Social Security numbers don’t add up
When it was started, a trust fund was established to cover any shortfalls between the Social Security benefits paid to American workers and taxes paid by them. It is predicted that, by 2033, this trust fund will be depleted completely. After that happens, the average Social Security recipient will only receive about 75% of their normal Social Security benefits.
Fact #5: There is one best way to increase your Social Security benefits
Any American consumer can start receiving their Social Security benefits at age 62 if they choose to do so. At age 70, it’s a must. Those eight years between age 62 and 70 are vitally important to keep in mind because every year that you wait to start getting your Social Security benefits your annual payouts increase by 8%. That means if you wait until age 70 instead of 62 to start getting your Social Security payments, you’ll receive 76% more money.
Put differently, if you can afford to delay getting your Social Security benefits until you reach the age of 70, and you end up living to be 82 years of age or older, you will get more Social Security income in your lifetime than if you had waited until full retirement age to start receiving your benefits.
Hopefully these 5 Facts about Social Security have opened your eyes to the realities that you face as a retiree who might be planning on relying on your Social Security benefits to support yourself in retirement. If you have any questions or comments about saving for retirement, please let us know and we will get back to you with answers and advice right away.