Social Security is arguably one of the most important programs to retired workers in the country – and for good reason. Social Security payouts account for more than half of all income earned by roughly 6 out of 10 retirees – despite the fact that the program was never designed to replace the majority of pre-retirement income. Balancing personal savings with Social Security benefits is paramount to realizing a financially secure, stress-free retirement. And what’s one of the biggest variables when it comes to making your retirement nest egg last? Life expectancy.
With over 2,500 rules enforced by the Social Security Administration and as many as 81 different potential strategies for collecting Social Security benefits, it’s no wonder pre-retirees and retirees alike often feel overwhelmed and confused when it comes time to claim benefits. What it comes down to, however, is that there are no one-size-fits-all solutions for collecting Social Security, and those of us without a basic understanding of how Social Security works are more likely to make uninformed decisions—which can lead to poor claiming strategies and overall reduced benefits.
Setting out on the path to retirement readiness can sometimes lead to stress and confusion, especially when you throw variables like life expectancy and Social Security benefits into the mix. But beginning your journey to financial literacy is vitally important, and everyone, regardless of age, needs to understand these Social Security basics.