GDA Action September 2019

38 • September 2019 Now offering Medicare Supplements Are you or someone you love thinking about Medicare? Stop here and let us answer your questions Why is Social Security important? • Chances are you paid into Social Security during your lifetime as 62 million people received monthly Social Security benefits in 2017. 1 Do you know what you’re paying for? • Social Security typically replaces about 40% of an individual’s earned income. 1 That percentage generally is less— about 27%—for those with a higher pre-retirement income. 1 • Lifetime benefits can be larger than you might expect: over $600,000 on average for a dual-income couple who turned 65 in 2015, and significantly more for high earners with longevity. 2 What do I need to know? It’s your decision. Do you need the money now or can you wait for an increased benefit? Age 62 About 71% of today’s retirees start benefits at the earliest possible age, locking in a reduced benefit compared with benefits at full retirement age. 3 Starting this early may be necessary if you’re in poor health or need the income. But with life expectancies now reaching into the 90s, delaying benefits can lead to a greater lifetime benefit for many retirees. Full retirement age (FRA) This is when Social Security will provide you with full benefits. The FRA is used to calculate any reduction benefits (if taken earlier) or increase (if taken later). FRAs vary based on date of birth; see Figure 1 to determine your FRA. Age 70 For each year you delay benefits between FRA and age 70, Social Security can add 7%–8% to future benefits, plus the COLA adjustment (cost of living adjustment). That guaranteed annual return can make this alternative very attractive, provided you have longevity. Delaying benefits until age 70 can also provide more income just when you may need it to help cover healthcare or other expenses. Br ak-even age At some point, Social Security will impact your life. It should therefore play a significant role in your retirement income plan. Family benefits Spousal benefits A lower-earning spouse may select the greater of his or her own benefits or up 1. Social Security Administration Wesbite: ssa.gov. 2. Urban Institute. “Social Security and Medicare Taxes and Benefits Over a Lifetime,” June 2018. 3. Social Security Administration. “Annual Statistical Supplement, 2017.” Social Security Maximizing Your Retirement Income