Did you start or review your retirement financial planning yesterday? With information from the SSA research publication, Fast Facts & Figures About Social Security, 2012, perhaps today I can provide more reason for doing so.
Good news is that median annual income for married couples and nonmarried persons aged 65 or older has increased markedly since 1962 (the earliest year for which data are available).
The 1962 median income for a married couple was $20,759 and $8,159 for a nonmarried person. The 2010 median income for a married couple was $44,718 and $17,261 for a nonmarried person. As used in the publication, a married couple is aged 65 or older if the husband is aged 65 or older or if the husband is aged 54 or younger and the wife is 65 or older. An aged unit is a married couple living together or a nonmarried person, which also includes persons who are separated or married but not living together.
However, from the “Income of the Aged Population” section of the Fast Facts publication, observe that the percentage of total income from Social Security benefits has been increasing. In 1962, Social Security benefits accounted for 30 percent of the aggregate total income of couples and nonmarried persons aged 65 or older. In 2010, Social Security was 37 percent of this total. Along with Social Security, percentages of other income, such as pensions, wages and assets are provided in the “Shares of Aggregate Income” chart.
Still in the “Income of the Aged Population” section of Fast Facts, look at the “Relative Importance of Social Security” chart. Really striking is the importance of Social Security for so many people, shown here:
“In 2010, 88% of married couples and 85% of nonmarried persons aged 65 or older received Social Security benefits. Social Security was the major source of income (providing at least 50% of total income) for 53% of aged beneficiary couples and 74% of aged nonmarried beneficiaries. It was 90% or more of income for 23% of aged beneficiary couples and 46% of aged nonmarried beneficiaries. Total income excludes withdrawals from savings and nonannuitized IRAs or 401(k) plans; it also excludes in-kind support, such as food stamps and housing and energy assistance.”
Why is this important to YOU?
Social Security should be part of your overall planning. While very important, it was never intended to provide full retirement income. Earlier this week I wrote that, under current law, if you have average earnings, your Social Security retirement benefits will replace about 40 percent of your pre-retirement earnings.
Would about 40 percent of your pre-retirement income go very far as 50 percent, or more, of your total retirement income? Would that be a financially carefree retirement for you?
Based on your retirement income planning so far, as a percentage how much of it depends on your Social Security? Recall that financial planners suggest you have in the area of 70-80 percent of pre-retirement earnings for a comfortable retirement.
Are you hoping for a secure financial retirement or are you planning for one? Your financial independence depends on you. I hope you are planning.