You’ll Need Social Security

People make a lot mistakes in financial and retirement planning. One I see regularly is pre-retirees, of almost every age, say they won’t need or rely on Social Security. Many say they assume they won’t get anything from it. Routinely surveys of pre-retirees indicate that 30% or fewer expect SS to be a “major source of income.” That’s in great contrast to surveys of those already retired. Social Security is reported to be a major source of income for 50% to 60% of retirees, in the same surveys.

SS retirement benefits will be important to many of us. They’ll be even more important if you plan properly to maximize both retirement and survivor benefits. That’s why I wrote my report, Secrets to Boosting Social Security Benefits. I encourage people to take SS retirement benefits seriously. A part of your planning, several years before retirement, should be to determine the best age and form for you to take the benefits. Too many people leave money on the table by not maximizing their SS retirement benefits.

Both of these analyses focus on people in their 60s. As people get older, it seems that they rely on Social Security even more—not only because they stop working, but probably because they exhaust their other assets, or because their other pensions are not indexed for inflation (unlike Social Security). According to Sylvia Allegretto, if you look at retirees in the middle of the income distribution in California, a full 70 percent of their income comes from Social Security, with only 16 percent coming from retirement funds.