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Sadly, many don't save anything throughout their lives and do rely on SS alone. And no; being smart/prudent enough to save or invest in another retirement plan/pension doesn't reduce our benefits -- and shouldn't. We pay into it, so we take out of it. Fair.
So it's official, I made it and am eligible to start collecting Social Security benefits albeit a reduced age 62 benefit. This I shall not do at this time. I hope to cross other age milestone lines in my gracefully aging sand, God willing, in my years ahead.
Good decision there youngster. I started collecting at 62 many years ago. I am still in good health and work partly out of boredom. Had I waited my benefit would be much greater now.
Sadly, many don't save anything throughout their lives and do rely on SS alone. And no; being smart/prudent enough to save or invest in another retirement plan/pension doesn't reduce our benefits -- and shouldn't. We pay into it, so we take out of it. Fair.
It's actually worse than "many". Only 30% of retirees have pension income or 401(k)/IRA distribution income. 70th percentile median household net worth for 65+ is less than $400K with most of that home equity. If you project out 20 years, the numbers get even more grim. Very few of the late-Boomers have a defined benefit pension coming. Savings rates got worse, not better. Birthrates dropped significantly for that group and those who did reproduce often have Millennials who haven't been economically successful and won't be able to help out.
Sad, but true. Savers and the thrifty are looked down upon, in fact. Honestly, the factor that makes me most reluctant to wait a bit longer to retire is the imminent collapse of society. There may not be time -- or money (even my OWN money) -- later.
....or the opposing perspective which is, rather than counting on the market with its variable returns (and actual losses at times) to keep earning and adding up for you, delay Social Security and get a pretty much guaranteed "return" each year that you wait.
Sure, you have to take out from your investments and that feels painful...unfortunately you can more easily "ignore" or overlook the pain and loss you experience by taking SS earlier. Just because avoiding one pain point is more immediate doesn't mean that it is the best choice long term.
I'm sure that mathjak will chime in very soon!
My way makes sense to me. Your way makes sense to you. Each of us has unique circumstances. When I enter my numbers into the break even calculator, my decision was a "no brainer."
Not clear who or what "mathjak" is. If a poster, I don't make my financial plans based on suggestions of anonymous people.
I'm not certain if pension payments affect SS. Working for wages does, if you earn more than about $15K, you start losing SS at a rate of $1 of SS lost for every $2 earned.
The above only applies if you take Soc. Security before your full retirement age. I imagine others will step up and point this out, too.
I live in Canada so my understanding of the US social security program is pretty basic.
Do most Americans look at their SS payments as a sole source of income in retirement, or as a supplement to their own investments and private pensions ?
Second. If a US citizen has a pension from a former employer, does that result in their SS benefit being reduced ?
Per the attached SS fact sheet M3 Mitch is correct that about 35% of elderly USA citizens rely on SS for 90% or more of their income. And more than half rely on SS for 50% or more of their income.
Only earned income (e.g., working wages) results in a SS reduction and only before Full Retirement Age (e.g., before age 66) as brightdoglover pointed out. Pension income and 401k/IRA withdrawals are not considered earned income and do not reduce SS, at least not directly. However this retirement income increases your gross income and can increase the amount of SS subject to federal income tax. For lower gross incomes, SS is not taxed. Taxes on SS are phased in as income increases - a maximum of 85% of your SS can taxed. For example a higher income person may be in the 25% tax bracket and pay tax on 85% of their SS so a $20K annual SS benefit would result in a tax bill of $4250 on that amount alone. Also a higher gross income may result in higher Medicare Part B payments.
Per the attached SS fact sheet M3 Mitch is correct that about 35% of elderly USA citizens rely on SS for 90% or more of their income. And more than half rely on SS for 50% or more of their income.
Only earned income (e.g., working wages) results in a SS reduction and only before Full Retirement Age (e.g., before age 66) as brightdoglover pointed out. Pension income and 401k/IRA withdrawals are not considered earned income and do not reduce SS, at least not directly. However this retirement income increases your gross income and can increase the amount of SS subject to federal income tax. For lower gross incomes, SS is not taxed. Taxes on SS are phased in as income increases - a maximum of 85% of your SS can taxed. For example a higher income person may be in the 25% tax bracket and pay tax on 85% of their SS so a $20K annual SS benefit would result in a tax bill of $4250 on that amount alone. Also a higher gross income may result in higher Medicare Part B payments.
This isn't answering his question. A big chunk of people age 62+ who are collecting Social Security are still working at least part time and aren't "retired". They hit age 62, start collecting since it's "free money", and keep working up to the $16,920 earned income cap. That totally skews the data. When you only look at the truly retired with no earned income, it's a totally different number.
I am envious of those that can retire at 62. Good planning! I have 5 more years before I can retire with a full pension, and I will be 66. So at 66 and 2 months (for SS) I will say goodbye to my 9 to 6 5 days a week...and I can't wait.
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