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Five Social Security Questions Baby Boomers Should Ask Before They Retire

Millions of people will be retiring in the next few decades, many of whom are asking questions in preparation for retirement. Boomers wonder…

Will Social Security still be around when it’s my turn to retire?



For years the press has been telling us that the system is headed for “break”. Millions of Americans count on these retirement benefits to help pay for living expenses in retirement, so this is obviously a big concern. Is there any truth to these rumors about our current pension system?

According to the 2009 Trustee Report, Social Security retirement benefits starting in 2016 will exceed earnings, and the trust fund could be depleted by 2037. are already collecting retirement benefits, but will only have enough income (OASDI taxes paid by those still working) to pay 76% of promised benefits.

We will likely see system reforms such as raising the retirement age, raising the salary threshold at which OASDI taxes are paid, and reducing benefits for future retirees. It’s less likely that people already on benefits will see their benefits reduced, so soon-to-be-retired baby boomers won’t see their benefits cut.

How much will my benefits be?



An important part of planning for retirement is knowing what resources you will have to help cover living expenses in your retirement years. Many people will depend solely on Social Security to survive in retirement; others will have pensions and/or investments to help with living expenses. Whatever your situation is now, you need to know how much income you can expect to receive in order to create a realistic budget for your retirement years.

Your retirement benefit amount will depend on a number of factors, including when you retire, how many years you worked, how much you earned during your working years, among other factors.

The formula for calculating your retirement income is quite complicated, but basically your top 35 years of earnings are averaged for inflation and indexed to determine your retirement benefits. If you take your retirement benefits early, they will be reduced by up to 25%; on the other hand, if you wait until your full retirement age to start collecting benefits, your benefits will increase by 8% for each year you wait.

The ssa.gov website has several calculators that can help you estimate your retirement benefits, or you can review the benefit estimate statement you receive each year.

When should I apply for Social Security?



Perhaps the most common question is “When should I register for retirement benefits”? You’ve already learned that collecting your retirement benefits early will mean fewer benefits for life. The question is, are you better off applying early and getting an extra year of benefits, or are you better off waiting for full retirement age or applying late?

Every situation is different, so this answer will depend on how long you plan to work, how much you have saved for retirement and your other sources of income (such as pensions).

How can I get the most out of my retirement benefits?



Your parents probably never ask how they can maximize their retirement benefits, but you should. Social Security is a much more valuable benefit than most people realize, especially because of the cost of living allowance (COLA), so every parent should ask this question. There is nothing wrong with using the rules to your advantage.

Will my Social Security retirement benefits be enough?



For most people your retirement benefit will not be enough to cover all of their living expenses during retirement. The intention was never to provide full support during retirement. It is designed to supplement other income (pensions and annuities) as well as your retirement nest egg. On average, Social Security accounts for about 40% of retirees’ income.

However, it’s still a very valuable benefit—whether it’s 40% or 90% of your retirement income—and you should plan carefully to make sure you and your family get the most out of it. .

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