Four Lessons About Social Security

learning to optimize your Social Security benefits

Master these Social Security lessons to get a more realistic view of your retirement.

According to Nationwide’s 8th Annual Social Security Consumer Survey, more than half of Americans express confidence that they know exactly how to optimize their Social Security benefits. However, only 6% actually understand all the factors that determine the maximum benefit someone can receive.

In addition, the report highlighted additional knowledge gaps:
  • A full 39% don’t know at what age they are eligible to receive their full benefits.
  • Just over half (51%) do not have a clear understanding of how much they will receive in future income.
  • Over a third (37%) incorrectly assume that Social Security benefits are not protected against inflation.
  • Nearly half (45%) mistakenly believe if they claim their benefits early, their benefits will go up automatically when they reach full retirement age.
By mastering these lessons, you’ll immediately go to the head of the class for retirement planning—and avoid being an unfortunate statistic in some company’s future survey!
 

Lesson #1: Your “full retirement age” for Social Security benefits is the age at which you may first become entitled to full or unreduced retirement benefits.

Match your birth year to the full retirement ages shown below. Now, kindly memorize it!
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
1955
Full Retirement Age 66 + 2 months
1956
Full Retirement Age 66 + 4 months
1957
Full Retirement Age 66 + 6 months
1958
Full Retirement Age 66 + 8 months
1959
Full Retirement Age 66 + 10 months
1960 & later
Full Retirement Age 67

Lesson #2: Social Security will only replace a portion of your preretirement income.

The rule of thumb is that you’ll need to replace about 75%–80% of your preretirement income. Social Security will help fund part of your income needs, generally somewhere between 25%–40% (depending on your earnings history). Your personal savings and retirement account will have to make up the difference.
 

Lesson #3: The longer you wait until you start taking your Social Security benefits, the more money you’ll receive.

Age 62 is the minimum age at which you can choose to begin receiving Social Security benefits. However, the math is pretty black and white: claiming earlier gives you a reduced benefit and claiming later gives you an increased benefit. For each year you postpone taking your benefit (until age 70), your monthly check will be larger. Check out the Social Security Benefits Planner for more comprehensive information, including calculators and other resources.
 

Lesson #4: Social Security benefits are somewhat protected against inflation.

For 2021, the Social Security Administration is paying out a cost-of-living adjustment of 1.3%. In planning for your retirement income, it’s important to note that any cost-of-living adjustment from the Social Security Administration can vary each year and is not guaranteed. Cost-of-living adjustments are typically announced in October of each year.

For advice and guidance on investments, insurance and financial planning, contact a local South State Financial Consultant or call (800) 382-0564.  

  • This material was created for educational and informational purposes only and is not intended as ERISA, tax, legal or investment advice. If you are seeking investment advice specific to your needs, such advice services must be obtained on your own separate from this educational material.

    Kmotion, Inc., 412 Beavercreek Road, Suite 611, Oregon City, OR 97045; www.kmotion.com

    ©2021 Kmotion, Inc. This newsletter is a publication of Kmotion, Inc., whose role is solely that of publisher. The articles and opinions in this newsletter are those of Kmotion. The articles and opinions are for general information only and are not intended to provide specific advice or recommendations for any individual. Nothing in this publication shall be construed as providing investment counseling or directing employees to participate in any investment program in any way. Please consult your financial advisor or other appropriate professional for further assistance with regard to your individual situation.
  • Broker
    *Please consult your tax-advisor for tax related issues.
    **Products and services offered through LPL Financial.

    Securities and advisory services are offered through LPL Financial (LPL), a registered investment advisor and broker-dealer (member FINRA/SIPC.). Insurance products are offered through LPL or its licensed affiliates. SouthState Bank, N.A. and SouthState Investment Services are not registered as a broker-dealer or investment advisor. Registered representatives of LPL offer products and services using SouthState Investment Services and may also be employees of SouthState Bank, N.A. These products and services are being offered through LPL or its affiliates, which are separate entities from, and not affiliates of, SouthState Bank, N.A. or SouthState Investment Services. Securities and insurance offered through LPL or its affiliates are:

    The services offered within this investment site are available exclusively through our U.S. registered representatives and are available for U.S. residents only. LPL Financial U.S. registered representatives may only conduct business with residents of the states for which they are properly registered. Please note that not all of the investments and services mentioned are available in every state.

Secure Log In

Close mobile menu
Login Error

Your username is valid but has a problem. Please call customer support

Our website uses cookies to ensure your online experience is as informative and relevant as possible. Please review our Privacy Policy to learn more about the information we collect.