Social Security Planning Starts Now
admin • October 14, 2019
A lthough you won’t become eligible for Social Security until your 60s, there’s a lot you can do to prepare before then. Here’s a rundown of steps you can take during each decade of your life:
- In your 20s:
If you’re like a lot of people, you’re embarking on a career. At this
point, there’s no guarantee that Social Security will be around in its
current form when you’re ready to retire. The smart move is to build up
retirement savings on your own. For instance, you should be
participating in a 401(k) or other qualified plan at work. If done,
Social Security benefits will be a pleasant surprise when you retire.
- In your 30s:
As
you continue make retirement contributions, begin checking on your
Social Security wage history. Go to the Social Security Administration
(SSA) website to set up and review your account. Eventually, benefits
will be based on your work history. Make sure your wages are being
reported correctly and correct any errors that occur. As the same time,
increase retirement plan contributions.
- In your 40s:
Typically, this is a time when your earnings increase significantly. Be
aware of the key rules relating to Social Security benefits. For
example, realize that the SSA uses your average earnings for the 35
highest-earning years to calculate your payments in retirement. So keep
track of this and continue to have lower income years be replaced with
higher income years. This will result in higher benefit checks when you
retire.
- In your 50s:
Circle a target
date for retirement. While not etched in stone, is allows you to analyze
whether you’ll be able to sustain your current lifestyle based on your
expected income and expenses. This exercise is more important if you’re
considering early retirement. Continue to check income being reported to
the SSA and create a forecast for the future. If you wait until your
60s to begin this planning process, it may be too late to save enough to
meet your retirement goals.
- In your 60s: Decide whether you want to begin taking benefits at age 62 (the earliest age), full retirement age (or age 70), or somewhere in between. The longer you wait, the greater your monthly benefits, but you’re giving up use of the money. Factor in aspects like your health, plan payouts, required minimum distributions and other earnings. Finally, remember that up to 85% of Social Security benefits are taxable, so it’s worth planning now!
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