Broker Check

A Pre-Retirement Homework Assignment

| October 13, 2017

This chart shows the so-called Full Retirement Age (FRA), which is the age at which you’re entitled to your full monthly Social Security benefit, a pension based on your earnings history.

Many boomers see their FRA as the time they ought to retire. But the question they should be asking themselves is: Will the monthly benefit I’ll get at my FRA be enough?

According to the Employee Benefit Research Institute, twenty-four percent of Americans have less $1000 saved for retirement, and almost half have saved less than $25,000. 

In 1983, Congress increased the FRA incrementally over time to save money for the program: it was 65 for anyone born in or before 1937 and will increase to 67 for anyone born in 1960 or later. The rise in the FRA saves the government money.  Putting off Social Security is the most effective way to improve your financial outlook for retirement, but delay isn’t the right answer for everyone.  Much depends on your other income, your spouse’s benefit, health and life expectancy, and planned retirement expenses.  If your FRA is 66, claiming at 70 increases your monthly benefit by a third.  If your FRA is 67, it increases your monthly benefit by a quarter.

For many people the FRA is more of a distraction than an aid to making good decisions.  What people really need is honest self-appraisal and objective advice from a professional who doesn’t have a dog in the hunt.  Most importantly, it pays to begin planning for retirement will in advance your 60th birthday, when time is still on your side.

A good place to start is the Social Security website.  Create a secure log in and download your Social Security Statement.  Check your earnings history shown on the statement for accuracy.  The website offers a benefit calculator, so you can play with different retirement dates to see the effects of early or delayed retirement.  Of course, we can help you do all this and remove much of the frustration and anxiety associated with retirement planning. Just call for a free consultation.   mh

Chart courtesy of The Center for Retirement Research at Boston College