Retirement Planning: A Primary Source of Money

Retirement usually means a lot of free time from now on. There are also two things that automatically come to mind, social security and employer pensions. Unfortunately, these two may not be enough to support the life of a retiree. Benefit from social security is deemed to be too small and there are less and less employers willing to provide pensions.

This is why personal savings are essential for this might be the only viable solution when it comes to retirement income.

A person is only eligible to receive social security benefits if he is consistent in his contributions amounting to that of at least 10 years. The amount of benefit is not the same for every individual. It is determined by the amount of your contribution and the age at which you choose to receive the benefits.

The good side is that benefits rise with inflation. The down side is that the earning used to determine the amount of benefit is capped. The cap is a disadvantage for those people who earn huge income for they will receive proportionately less of their pre-retirement earning compared to those who earn below the cap.

When you reach the age of full retirement, which used to be 65 years old, you will be able to receive your benefits in full. However, people who were born in the year 1938 and later, the full age of retirement is increasing gradually until it arrives at age of 67 for those who are born later than 1959.

If you want to estimate the benefits, you can log on to the website of Social Security Administration at www.ssa.gov. Another way is to review the annual statement that will be sent by the SSA around three months prior to your birthday. If it has not arrived yet, then you can just request online.

Early vs. Late Acquisition of Benefits
You can choose to start getting your benefits even as early as 67. However, expect that you will receive fewer benefits compared to if you have waited for your actual and full retirement age to come first. For instance, 66 is your full retirement age and you decided getting your benefits by age 62. Then you will be receiving just around 75% of the amount you are supposed to have. For every month that you wait patiently for until you reach the actual age, your monthly benefits are set to increase. So in this example, by age 63, you will get about 80% of the actual amount.

To be clever enough to get all that money, one must be stupid enough to want it.

On the other hand, if you decide to take the benefit years after your full retirement age, you will receive an increase in payment. Each year beyond your full retirement age equals an ring_The_Two_Types_Of_Contracts.html">additional 8% per month. So, if your full retirement age is 66 and you choose to get your benefit at age 30, you will receive a monthly benefit of 132% of the amount you should have received had you starting getting the benefit at age 66.

Remember that if you will get the benefits earlier, you will be paying less and get more in the process. The reverse will happen if you will opt to delay in getting your benefits. So If you want the benefits to work to your advantage, you have to know when you are going to receive them.

Spousal benefits is also available
Even if your spouse does not have any earnings with Social Security, he or she will still get the benefits because of your record. Your children will also be eligible but this will depend on their age.

If you start getting benefits at full retirement age, then your spouse can get about 50% of your benefits. If you will take in your benefits at an early age, then your spouse's benefits will lessen too. The percentage or rate of the benefits they are to get will vary on when you will take your benefits.

Always remember that your spouse may be entitled to his or her own set of benefits as well. If this is the case, then he or she will surely be paid higher.