In the retirement planning business, we hear a lot of questions about Social Security. It’s a huge, confusing government program, after all! Possibly the most common question we hear is also the simplest: “How am I supposed to live on Social Security in retirement?”
Often, answers to Social Security questions are quite complex, and depend upon the specifics of your situation. But in this case, the answer is quite short and sweet: You aren’t supposed to live on Social Security!
From the beginning of the program, Social Security was never meant to be a retirement plan. The monthly benefits are only intended as a supplement to your retirement income. As President Franklin Roosevelt described the program, “The [Social Security] Act does not offer anyone, either individually or collectively, an easy life — nor was it ever intended so to do. None of the sums of money paid out to individuals in assistance or in insurance will spell anything approaching abundance. But they will furnish that minimum necessity to keep a foothold; and that is the kind of protection Americans want.”
In other words, the burden of planning for retirement income still falls on you. But because inflation and a higher standard of living has created a need for more retirement income than ever before, investigate these ways you can potentially maximize your Social Security benefits for a better supplement to other forms of income that you establish.
- Work at least 35 years. Social Security benefits are based on the average of your 35 highest-earning years. You don’t want any zeros averaged into the formula.
- Ask for a raise when you deserve one. Take on a second job. Go back to school and complete advance certification in your field. Do whatever it takes to boost your earnings, and therefore boost your eventual Social Security benefits.
- Wait until full retirement age to claim your benefits. If you claim your benefits at age 62, the first age of eligibility, they will be permanently reduced from what they would have been at full retirement age (65 to 67, depending on your year of birth).
Aside from maximizing your Social Security benefits, plan for you own stream of income in retirement. During those 35 years of work, you should be setting aside funds in a 401(k) or other retirement savings account. This way, you can worry less about having to depend on Social Security. Call us for more information, and we can help you identify additional ways to potentially maximize your benefits while also establishing your own income for retirement.
Portions of this article have been excerpted from “Why Your Retirement Won’t Be Like Your Parents’ — and What You Can Do About It” by Stacy Johnson for MoneyTalksNews. Stacy Johnson is not affiliated with LPL Financial.
Content in this material is for general information only and not intended to provide specific advice or recommendations for any individual.