SOCIAL SECURITY

Why it’s a HUGE MISTAKE

to rely exclusively on

your Social Security

benefits in retirement

Social Security benefits have

become an increasingly

important source of income for

retirees in America.

According to the Social Security

Administration, nine out of ten

individuals age 65 and older

receive benefits.

38%

These benefits represent

38% of the typical person’s

retirement income.

Given the growth of the Social

Security system, this is nothing to

be alarmed about.

What is alarming, however, is the

growing number of people that

rely on Social Security for their sole

source of income in retirement.

This describes an estimated 22% of

married couples and 47% of

unmarried persons.

22%

47%

Married Couples Unmarried Persons

That’s a lot

While it’s hard not to empathize

with people in this situation...

…one should also appreciate

how important it is to avoid a

similar fate.

This is because “Social Security

was never meant to be the only

source of income for people

when they retire.”

Its purpose instead is merely to

supplement one’s savings or

pension plan.

70%

Most retirement experts say you

need 70% of your pre-retirement

income to live comfortably.

Yet, depending on how much you

earned during your 35 highest-

earning years, Social Security

benefits will replace only between

20% and 51% of your pre-

retirement income.

51%

41%

32%

28%25%

24%22% 22%

30k 60k 90k 120k 150k 180k 210k 240k

Sources: Social Security Administration, author's calculations

Social Security Benefits vs. Pre-Retirement IncomePrimary insurance amount as a percent of average annual indexed earnings over 35 highest-earning years

One way to tilt this equation in

your favor is to wait before

applying for benefits.

This helps because the size of your

monthly benefits depend, in part,

on when you elect to receive

them.

75%80%

87%93%

100%

108%

116%

124%

132%

62 63 64 65 66 67 68 69 70

Social Security Benefits by Retirement AgePercent of Primary Insurance Amount

However, even waiting won’t get

you to 70% of your pre-retirement

income.

It’ll get you close – i.e., 67% -- if

your average income was $30,000

over your highest earning years.

But if you earned an average of,

say, $100,000 a year, then it’ll

replace only 40%.

This is why people should do their

best to save during their working

years.

It’s also why retirees should think

long and hard about ways to

maximize the size of their benefits

even if they’re already retired.

For instance, one Seattle couple

recently discovered a handful of

little-known “Social Security

secrets” that can boost a retiree’s

income by as much as $60,000.

They were shocked by how easy it

was to take advantage of the

loopholes.

One MarketWatch reporter even

argued that if more Americans

used them, the government

would have to shell out an extra

$10 billion every year!

As a result, once you learn how to

use these loopholes, you could

retire confidently with the peace

of mind we’re all after, even if

you’re woefully unprepared.

To learn how to do so, click here

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these strategies today.