SOCIAL SECURITY AND THE INCOME GAP When the Social Security retirement income system was created in the 1930s, it was Year of Birth
Full (normal) Retirement Age
1937 or earlier
age 65
designed to provide a partial retirement income supplement. Today, the average Social Security retirement benefit is approximately $1,600 per month, or $19,200 per year. The amount of annual living expenses not covered by Social Security or income sources such as a pension or rental income is often referred to as your “income gap.”
1938 1939 1940 1941 1942 1955 1956 1957 1958 1959
age 65 and 2 months age 65 and 4 months age 65 and 6 months age 65 and 8 months age 65 and 10 months age 66 and 2 months age 66 and 4 months age 66 and 6 months age 66 and 8 months age 66 age 66 and 10 months
1943-1954
Full, or unreduced, Social Security benefits are based upon your birth year. (See chart to right.)
1960 and later
age 67
If you start your retirement benefits at age 62, your monthly benefit amount may be reduced by as much as 30%. Thanks to what the Social Security Administration calls “delayed retirement credits,” benefits increase 8% each year you delay receiving Social Security—up to age 70. So waiting until you reach age 70 means as much as a third more income for life. Source: www.ssa.gov
Your personal situation can help you decide when to take benefits. Consider the following:
Your health. If your health is poor, you may want to take benefits early. Are you still working? Your benefits will be temporarily reduced once your income exceeds a certain amount if you begin receiving benefits prior to your normal retirement age. Is your family long-lived? You may need the extra income later on, so waiting may be the best choice. The “break-even” point. If you are considering taking benefits earlier or later than your normal retirement age, you can figure your “break-even” point—the age after which your total lifetime benefits would be either less or more than they would have been if you had taken them at normal retirement age.
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