How Much Can the Average Senior Citizen Expect To Benefit From Social Security?

Senior couple on vacation.
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Ages 66-67 are magic numbers; that’s when many people now and later down the road will become eligible to begin receiving Social Security retirement benefits — 65 was previously the full retirement age. According to the Social Security Administration, nearly nine out of 10 people ages 65 and older are currently receiving these benefits, and the number of Americans 65 and older is on the rise. By 2035, the SSA believes that the number of people ages 65 and older will increase from approximately 56 million to over 78 million.

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You can expect to live just over 20 years once you turn 65, so it’s important to maximize your Social Security benefit. Here’s advice from financial experts on how to get the most out of your Social Security benefit and how much can you expect to receive.

How Much Can the Average Senior Citizen Expect To Benefit From Social Security?

According to AARP in December 2020, the monthly maximum benefit that an individual can receive in 2021 at full retirement age (currently 66 years and 2 months) is $3,148, and the maximum monthly benefit at age 70 is $3,895. However, the average senior citizen can expect to benefit much less from Social Security. According to the Social Security Administration, the average monthly Social Security benefit for retired workers in July 2021 was only $1,556.72. 

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“It’s important to remember that years worked, when you collect and other factors will determine your monthly Social Security benefit. Social Security benefits are different for each and every person,” said John Hill, president and CEO of Gateway Retirement

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What Does the Expected Social Security Benefit Mean in Terms of a Secure Future?

“Social Security was established to replace only 40% of pre-retirement earnings,” said Wilson Coffman, president of Coffman Retirement Group in Huntsville, Alabama. “The current funds that pay Social Security benefits have been running low and projections say those funds could run out by 2035. It is very important to create multiple income streams to replace the other 60% of pre-retirement earnings. Some options to consider would be placing retirement accounts, such as IRA or 401(k) accounts, in fixed index funds with income rider options or other annuity products that provide income streams.”

What Are Some Tips To Maximize Your Social Security Benefit?

“Navigating Social Security income can be complicated, but there are strategies to maximize your Social Security benefits,” said Greg Middendorf, CFP, of HCM Wealth Advisors. Here is Middendorf’s advice:

1. Work at least 35 years: “The Social Security Administration looks at your average monthly income over your 35 highest-earning years when calculating your benefit,” Middendorf said. “You can still get checks even if you didn’t work that long, but you might be disappointed in the amount. Those who haven’t worked for at least 35 years have zero-income years included in their benefit calculation, and even one of these can significantly reduce your checks.”

2. Check your earnings record: “[Do this] at least once per year to make sure that everything there appears accurate,” he said. “Just remember, the figures listed there show what you’ve paid Social Security taxes on, which isn’t always the same as your income. In 2021, for example, you only pay Social Security taxes on the first $142,800 you earn. In prior years, this number was lower. So high earners may find their earnings record doesn’t reflect their income at all, but it could still be correct.

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“If you do notice a mistake, you can submit a Request for Correction of Earnings Record form to the Social Security Administration, along with any documents you have that prove your income for that year,” Middendorf advised. “The Social Security Administration will evaluate your request and update your earnings record if appropriate.”

3. Choose your benefit age carefully: “You can claim Social Security as soon as you turn 62, but if you want the full amount you’re entitled to based on your work history, you have to wait until your full retirement age (FRA),” Middendorf said. “That’s 66 for those born between 1943 and 1954. Then, it rises by two months every year thereafter until it reaches 67 for those born in 1960 or later.

“Every month you receive benefits before this age reduces your checks by anywhere from 5/12 of 1% per month to 5/9 of 1% per month. That might not seem like much, but it adds up over time. Those who start Social Security at 62 only get 70% of their full benefit per check if their FRA is 67, or 75% if their FRA is 66.

“But this process also works the other way. Delaying benefits past your FRA increases your checks by 2/3 of 1% per month until you hit 70. After that, your checks won’t increase anymore. Those with a FRA of 67 can get up to 124% of their full benefit per check, while those with a FRA of 66 can get up to 132%.”

Besides Social Security, Approximately How Much Money Should You Save in Advance for Retirement?

“Evaluating how much money you will need to retire has multiple variables depending on each household lifestyle,” Coffman said. “What is the cost-of-living expense in each individual home? The biggest expense is health care cost and usually traveling within the first five years of retirement.”

“A generally accepted rule of thumb for retirement planning is that you must have at least 80% of the annual salary earned at work,” said Justin Nabity, CFP and founder and CEO at Physician’s Thrive. “This is sometimes referred to as replacement income. Therefore, if you earn $100,000 a year at work, you need at least $80,000 a year to retire. This is the beginning. Multiply this number by your average life expectancy after retirement to arrive at the minimum total amount you need. Anything above that limit and you are usually in good terrain financially.”

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Last updated: Aug. 20, 2021

 

About the Author

Cynthia Measom is a personal finance writer and editor with over 12 years of collective experience. Her articles have been featured in MSN, Aol, Yahoo Finance, INSIDER, Houston Chronicle, The Seattle Times and The Network Journal. She attended the University of Texas at Austin and earned a Bachelor of Arts degree in English.

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