How does Social Security fit into my retirement?
Get a ballpark estimate
Social Security is income you should be able to depend on, but it’s just one slice of your retirement savings pie. Your benefits are based on earnings during your working years, and the average monthly payment is about $1,500 per month. Whether that sounds generous or paltry, it’s smart to think about Social Security as a way to pad your other retirement income.
Typically, you can start receiving Social Security benefits between ages 62 and 70. If you want to claim the maximum benefit, you have to reach full retirement age (67 for those born after 1960). If you start drawing benefits as early as you can, your monthly amount will be reduced. Wait until age 70, and your monthly benefit will increase. Figure out how your timing (and your partner’s) can impact income. It may pay to be patient.
Talk to your financial professional about the best way to begin drawing Social Security. Have you maxed out contributions to your own IRA or 401(k)? You could structure your current investments to provide a relatively stable income while you let your Social Security benefits grow.
Reduce your tax bill
You may be surprised that Social Security can be taxable income. Depending on where you live and your other sources of income, you may have to pay taxes on your benefits. Here are three ways to help you keep more of your Social Security dollars.
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Whether you are collaborating with a financial professional or figuring out your own finances, these questions can help get you started.
How long should I wait before taking Social Security?
How should I manage withdrawals from other accounts to minimize my tax burden?
What percentage of my retirement income will come from Social Security?
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