Social Security and Retirement Planning

Social Security Benefits were never set up to be the “sole” source of retirement benefits, but to be the foundation from which to build. On top of the foundation of social security benefits it was expected that most Americans would receive some type of pension benefits, have savings and investments, and possibly other forms of income, yet sadly that is not the case for many receiving benefits.

If you haven’t done so already, start early planning for the benefits you’ll receive at retirement. You need to work to earn Social Security “credits.” In 2017, you get one credit for each $1,300 in earnings. A worker can earn a maximum of 4 credits per year. For example: To earn 4 credits in 2017, you must earn at least $5,200. Earning 40 credits (10 years of work) throughout your working life will qualify you for a retirement benefit.

Full retirement benefits are paid after reaching Full Retirement Age. See the chart below:

Year of Birth                          Full Retirement Age

1937 or earlier                                      65

1938                                                    65 & 2 months

1939                                                    65 & 4 months

1940                                                    65 & 6 months

1941                                                    65 & 8 months

1942                                                    65 & 10 months

1943 –1954                                          66

1955                                                    66 & 2 months

1956                                                    66 & 4 months

1957                                                    66 & 6 months

1958                                                    66 & 8 months

1959                                                    66 & 10 months

1960 or later                                         67

Before your Full Retirement Age (FRA), you get a reduced monthly payment. Currently age 62 is the earliest age at which you can begin to collect benefits. If you wait past your FRA, you get an even higher monthly payment. Putting off receiving benefits will earn you Delayed Retirement Credits (DRCs) until age 70.

For example, if you were born from 1943 through 1954:

At Age             Benefit to be Received

62                                75%

66                                100%

70                                132%

The chart above illustrations a great planning tool for delaying receiving your payments especially if you don’t really need the income.

How are Social Security Benefits Calculated?

Step1- Your wages are adjusted for changes in wage levels over time

Step 2- Find the monthly average of your 35 highest earning years

Step 3- The result is your “average indexed monthly earnings

You can expect to get only a percentage of your pre-retirement earnings.

Low Wage Earners will get approximately 55%; Average Wage Earners 41%; and High Wages Earners will receive approximately 34% of their pre-retirement earnings

As you can see, Social Security Benefits cannot and should not be our only source of retirement income. For those of you that have been procrastinating, let’s start planning!

For a convenient, and quick financial planning tool, go to: to create different scenarios based on different ages and earnings and the best time to start receiving retirement benefits.