As you save for retirement over the course of your working life, you may wonder how Social Security benefits will help supplement your retirement income. Knowing some Social Security basics can help you plan your finances and ensure you save enough for the retirement lifestyle you imagine.
Did you know...
...Social Security will only replace a portion of your income in retirement?
Social Security is not intended to be your sole source of retirement income — rather, it is intended as a supplement.
Social Security will help fund part of your income needs, generally between 25% and 40%. Your personal savings and retirement account will have to make up the difference--about 75% to 80% of your pre-retirement income. Be sure to save for retirement outside of Social Security, using accounts such as 401(k)s, IRAs, or others.
...if you wait longer to start receiving Social Security, your monthly benefit will be more?
When you decide to begin collecting your Social Security benefit affects how much money you receive. If you wait until your full retirement age, you will receive 100% of your retirement benefits. Full retirement age is based on the year you were born.
| Birth Year | Full Retirement Age |
| 1955 | 66 + 2 months |
| 1956 | 66 + 4 months |
| 1957 | 66 + 6 months |
| 1958 | 66 + 8 months |
| 1959 | 66 + 10 months |
| 1960 & later | 67 |
You may choose to begin receiving benefits as early as age 62. However, you will only receive a percentage of your full benefit. That percentage will not increase to 100% at age 67 when you reach full retirement age.
For example, if your full retirement age is 67 and you begin collecting Social Security at age 62, you will receive just 70% of your monthly benefit. Your benefit will remain at 70% for as long as you collect Social Security.
Here’s how the percentages break down for someone whose full retirement age is 67:
Social Security Benefit by Filing Age
- 62 70%
- 63 75%
- 64 80%
- 65 86%
- 66 93%
- 67 100%
- 68 108%
- 69 116%
- 70 124%
...you can claim Social Security on your spouse’s--or former spouse’s--income?
You may be eligible for spousal benefits if you are married, divorced, or widowed and your spouse was eligible for benefits.
When applying for Social Security, you automatically apply for your benefit or half of your current spouse’s benefit. Claiming Social Security on a spouse’s income doesn’t affect the spouse’s benefit.
For spouses to receive the benefit, they must have been married for at least one year and be at least age 62 or care for a child under age 16 (or one receiving Social Security disability benefits). In addition, spouses cannot claim the spousal benefit until the worker files for her or his benefit. There may be other caveats and criteria depending on your specific situation.
...it’s never too early to start planning?
Whether you want to retire at 55 or 75, start planning as soon as possible. An experienced financial advisor can help you understand your Social Security options--and build a plan to save for what Social Security won’t cover.
Contact a First Interstate Wealth Advisor to start your conversation today.