What is the average Retirement Income in the US? (2024)

As you enter your golden years, the terms social security and retirement often go hand in hand.

With increasing life expectancy and a growing aging population, grasping the role of Social Security in your retirement planning is more important than ever.

In the latest episode of “Retire As You Desire,” we delve into key aspects of Social Security to help you understand how your approach can impact both Social Security and retirement.

Let’s take a closer look at how Social Security can play a vital role in your retirement strategy.

How Social Security and Retirement Fit Together

When crafting a retirement strategy, many people often consider Social Security as a foundational pillar of their plan.

To truly grasp how Social Security and retirement are intertwined, we need to delve into the insights shared in the latest podcast episode.

The Critical Role of Social Security and Retirement Planning

Understanding how Social Security fits into your financial plan is crucial, whether it is your main income or an extra source.

Bill says, “This is the most important part of any retirement income plan, whether you have Social Security or not.”

It’s also important to decide when to start collecting your Social Security benefits.

Do you know the best age to begin? Or how much do you need to retire?

You need to learn how to use it effectively in your strategy to ensure a secure retirement, especially if you want to retire early.

How Social Security Benefits Are Calculated

Social Security benefits are calculated based on your Average Indexed Monthly Earnings (AIME), which reflect your highest 35 years of earnings.

This figure is then used to determine your Primary Insurance Amount (PIA).

Bill highlights how these calculations can influence your monthly benefits and emphasizes the importance of understanding these details for effective planning.

Most people have no clue how your Social Security income is actually calculated,” says Bill.

By grasping this process, you can make informed choices about when and how to file for benefits, and gain a clearer picture of what your income will look like during retirement.

Claiming Early vs. Delaying Social Security and Retirement

Some people dream of retiring young, while others prefer to work until the very end because they find joy in their jobs.

So, when planning your golden years, it’s not just about where you’ll live or which luxuries you’ll indulge in; it’s also about the right moment to claim your benefits, as this can shape the rest of your retirement.

Claiming your benefits early means your monthly payment will be lower, but if you choose to delay, you can boost your benefits by 8% for each year you wait beyond your full retirement age.

As Bill points out, “If your full retirement age is 67, and if you wait till 70, you’re going to receive an 8% increase every single year that you delay.”

This decision can have a substantial effect on your long-term retirement income.

Understanding Cost of Living Adjustments (COLA)

When considering social security and retirement, many people overlook the fact that Social Security benefits are adjusted annually to offset inflation through Cost of Living Adjustments (COLA).

These adjustments are based on the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W), which helps maintain your purchasing power over the years.

Bill explains how this system operates and why it matters for retirees: “The cost of living adjustments are going to help you keep pace with inflation on a different level.”

The Future of Social Security and Retirement: What’s at Stake?

Social Security is grappling with significant long-term financial challenges, and projections suggest that the trust fund could run dry in the coming decades.

Bill breaks down what this could mean for future beneficiaries and explores potential solutions, such as increasing payroll taxes or making adjustments to benefits.

“Retirement is all about making better decisions, but from a benefit standpoint,” he points out.

Staying updated on these developments will empower you to navigate the future of Social Security and retirement with greater assurance.

Simultaneously, it’s important to include quality plans and investments in your overall strategy—not just rely on Social Security alone.

Maximizing Your Social Security Benefits

There are a variety of strategies that couples can use to maximize their Social Security benefits.

Bill offers valuable insights into spousal benefits, restricted applications, and survivor benefits, all of which can greatly enhance your household’s retirement income.

“If you claim your benefits before your full retirement age, everyone’s income is affected. It will be reduced,” warns Bill.

Understanding the optimal timing and techniques for claiming these benefits is crucial. By doing so, you can fully leverage the advantages available to you and pave the way for financial success.

Plan Your Retirement with Bloom Financial

Social Security and retirement are closely connected, especially when you’re figuring out how to enjoy your golden years.

Are you ready to take charge of your Social Security strategy and enhance your retirement planning?

At Bloom Financial, we’re here to help you navigate the ins and outs of Social Security and retirement without the stress.

Set up a meeting with us to learn how to increase your Social Security benefits.

If you need help choosing when to claim, understanding what to expect in the future, or finding ways to get the most from your benefits, we’re here to help you achieve the retirement you want.