Understanding Social Security Benefits as Part of a Holistic Financial Plan
Social Security is a critical part of your retirement savings strategy, but how much do you really know about it?
Social Security benefits play an important part in most Americans’ retirement plans. To yield the best possible financial outcome, it’s critical that we educate ourselves on how to maximize those benefits.
According to a MassMutual poll, over 35% of respondents age 55-65 failed a basic quiz about their Social Security benefits knowledge. Another 18% barely passed, earning a D.
As you or your loved ones approach retirement, how much do you really know about this critical retirement planning asset?
Determining your benefit amount
Social Security payments are calculated using the 35 highest-earning years of your career, adjusted for inflation. As of January 2022, the average Social Security benefit is $1,657 per month. The maximum benefit for someone of full retirement age this year is $3,345 per month.
If you’re counting on this payment as a main source of retirement income, consider the following scenarios before cashing in:
- Claiming early. While Social Security benefits can be claimed as early as age 62, collecting them before you reach full retirement age may result in reduced monthly benefits for the rest of your life — even after you reach yourfull retirement age. The full retirement age is 66 for people born from 1943-1954, and it gradually rises to age 67 for those born in 1960 or later.
- Receiving benefits while working. Many Americans continue to work while collecting their Social Security benefits. If you’re among them—or plan to be—it’s important to understand how earning an income may affect the amount of your benefits. For 2022, the parameters are as follows:
- If you’re under full retirement age during all of 2022, Social Security will deduct $1 in benefits from every $2 that you earn above $19,560/yr ($1,630/mo).
- If you reach full retirement age during 2022, Social Security will deduct $1 in benefits for every $3 you earn above $51,960/yr ($4,330/mo), until the month you reach full retirement age.
- If you’ve already reached full retirement age, you keep all your Social Security benefits, no matter how much you
- Waiting until full retirement age or up until the maximum threshold of 70. The longer you wait, the greater your benefits will typically be. The amount increases by a certain percentage each year (depending on your date of birth). The percentage of increase is calculated using simple interest (not compounded) and will cease once you reach age 70 — even if you wait until after age 70 to start collecting your benefits.
Will Social Security be enough?
Many retirees rely on Social Security to fund their retirement, but that doesn’t mean it will be enough to sustain the lifestyle you want and deserve. Most experts agree that you may need 80% of your pre-retirement income to maintain your standard of living. So when it comes to Social Security, make sure you’re not leaving money on the table.
A reverse mortgage from Reverse Mortgage Funding (RMF) can help supplement your monthly income and delay Social Security benefits until you’re eligible for the maximum amount. This type of loan leverages your home equity, allowing you to use the funds however you see fit — all while you continue to live in and own your home*. The funds can be accessed as a lump sum, monthly payments or a line of credit that's available if and when you need it**.
Because retirement income isn’t always predictable
Understanding all your financial options can help you more accurately prepare for your financial future. Check out our detailed guide to better understand how to maximize your Social Security benefits in 2022.
To learn more about a reverse mortgage, and if it’s the right solution for you, reach out to RMF today at (888) 277-1567 for an appointment with a local loan specialist.
SEE WHAT FUNDS YOU MAY HAVE AVAILABLE
If you have equity in your home and believe you meet the eligibility requirements, a HECM may be the option that could help you retire smart.
This content is sponsored by RMF, one of the nation’s leading reverse mortgage lenders. We are dedicated to helping older Americans retire more freely, in the comfort of their own homes. As a result of our commitment to providing an extraordinary and positive customer experience, we have earned a 98% customer satisfaction rating; a 4.6-star / Excellent score on Trustpilot; 4.8 out of 5 stars on LendingTree; and an A+ rating with the Better Business Bureau. Call 888-277-1567 to speak with a licensed reverse mortgage specialist to learn about our retirement financing products and solutions.
*As with any mortgage, you must meet your loan obligations, keeping current with property taxes, insurance, and maintenance.
**Borrowers who elect a fixed rate loan will receove a single disbursement lump sum payment. Other payment options are available only for adjustable rate mortgages.