Social Security has put out new fact sheets to inform people about Social Security statements and ways to access these statements online, but one of the fact sheets makes it clear that you should not be counting solely on Social Security benefits to fund your retirement.
As you can see from the portion of the fact sheet that follows, Social Security is making an attempt to inform the public that they should have another type of retirement option other than just Social Security benefits because Social Security benefits makeup only about 40 percent of earnings while employed. This is an important thing to make people aware of before it is too late and they realize Social Security benefits are not going to be able to provide for the complete needs of retirees.
Unfortunately millions of Americans have no other sources of retirement funds when they stop working other than Social Security benefits and this can cause poverty for retirees. Some are lucky enough to have other sources of retirement funds like a 401k or an IRA, but the ones who don’t find that they have no other choice but to return to work. Social Security has many rules in place and someone can receive Social Security while they are working, but it is important to understand how earnings will impact Social Security benefits. The other benefit of continuing to work until age 70 is that Social Security benefits will increase to the maximum benefit amount. Below is a portion of the fact sheet that addresses these issues.
Keep in mind
Social Security is not meant to be your only source of income in retirement. On average, Social Security will replace about 40 percent of your annual pre-retirement earnings, although this can vary substantially based on each person’s circumstances. Your full retirement age is 67. Starting retirement benefits before your full retirement age (as early as age 62) lowers this percentage and starting benefits after your full retirement age (up to age 70) increases it. Learn more at www.ssa.gov/pubs/EN-05-10035.pdf.
Save for retirement
Social Security is not meant to be your only source of income in retirement. You will likely need other savings, investments, pensions, or retirement accounts to live comfortably in retirement. Because your retirement could last 20 years or more, it is important to begin your financial planning as early as possible.
- If you have a workplace retirement plan, be sure to find out how it works so that you can make the most of it. Your employer might match some or all of your plan contributions. If your employer does not offer a plan, there are other ways to save and invest on your own. Learn more about how to save at www.savingmatters.dol.gov/employees.htm.
- The earlier you start saving, the more time you will have to build your retirement income. For more information on investing and saving, check out www.investor.gov.
- Any amount you can save will add up over time. You can find a savings calculator at www.investor. gov/additional-resources/free-financial-planningtools/compound-interest-calculator.
