Close App Popup

SouthState

South State Bank
Install on iOS

How Social Security Fits into Your Retirement Plan


90% of Americans age 65 or older receive monthly Social Security payments1. While it probably isn’t enough to live on, it will likely be a significant part of your financial plan.

The statistics are clear: Social Security comprises up to 34% of the average retiree’s income. Moreover, 71% of individuals and 48% of married couples count on Social Security benefits for at least half of their income. Your financial plan should account for your total monthly income including the Social Security benefits for yourself and your spouse.

Understand how your benefits are calculated. The Social Security administration uses a formula to figure your annual benefit. The formula adjusts your reported past income for inflation and then averages together the 35 highest income years. You can then get that amount divided into 12 monthly payments. But your age makes a big difference in how much you actually receive.

Know your options. Your primary insurance amount (PIA) is what you can receive if you’ve reached full retirement age (FRA, 66 for folks born between 1943 and 1954, higher thereafter2). The amount will be less if you start taking payment at a younger age (starting at age 62) or greater if you wait beyond FRA (up to age 70). If you start at age 62, your PIA is reduced by 20% to 30%, but the reduction decreases each year. Your benefit increases annually by 8% for each year you wait after your FRA. Spousal benefits are at least half of the other spouse’s PIA.

Making up the shortfall. A common rule of thumb is that you’ll need 70% of your pre-retirement income to have a comfortable retirement3. But if you have big plans for travel and other expensive activities, you may need 100% or more of your pre-retirement income. Once you understand the limits of Social Security benefits, you have a good indication of how much you’ll need from other sources to support your desired lifestyle. Other sources could include annuities and rental properties.

Required Minimum Distributions (RMDs) You can start receiving penalty-free distributions from your IRA and 401(k) at age 59 ½. But thanks to a recent change, you don’t have to start taking RMDs until age 72. Moreover, you can continue to contribute to your 401(k) (and postpone RMDs) as long as you work. Most importantly, the Coronavirus Aid, Relief, and Economic Security (CARES) Act has suspended RMDs for 2020. However, you can still take distributions if you choose to and they will be taxed appropriately. If you have already taken your RMD for 2020, you will need to talk with a financial professional about your options.

A holistic plan is crucial. The earlier you work out your financial plan for retirement, the better able you’ll be to take the steps necessary to meet your goals. At SouthState Investment Services we would be delighted to review your retirement plan and help you optimize it to pursue your desired outcomes. Remember, it’s never too late (or too early) to get started, so contact us today.
 

  • 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. South State Bank, N.A. and South State Investment Services are not registered as a broker-dealer or investment advisor. Registered representatives of LPL offer products and services using South State Investment Services and may also be employees of South State Bank, N.A. These products and services are being offered through LPL or its affiliates, which are separate entities from, and not affiliates of, South State Bank, N.A. or South State 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.