Almost all retirees in the United States collect Social Security retirement benefits, and these are an important income source. However, the benefits may not be as big as many seniors wish they were, and they are also not enough to live on by themselves.
Whether you're disappointed with your benefit amount or are feeling pretty good about it, it can be interesting to know where you stand with regard to your Social Security income compared to your peers.
So, is your Social Security benefit bigger or smaller than the average? Here's how you can find out.
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This is the average Social Security benefit
How much is the average Social Security benefit? It actually depends upon your age. The table below shows the averages for people of different ages. These are the average benefits as of June 30.
|
Age |
Average Social Security benefit |
|---|---|
|
62 |
$1,377 |
|
63 |
$1,392 |
|
64 |
$1,447 |
|
65 |
$1,613 |
|
66 |
$1,809 |
|
67 |
$1,963 |
|
68 |
$2,004 |
|
69 |
$2,052 |
|
70 |
$2,188 |
Data source: Social Security Administration.
As you can see, benefits are higher at later ages. That's the case, in large part, because when you delay a benefits claim, you avoid early filing penalties that apply if you claim benefits before your full retirement age. On the flip side, a late claim results in an increase in monthly payments as a result of earning delayed retirement credits.
No one can live on Social Security alone
While you can see that the average benefit does increase over time, you can also see that none of these benefits would provide you with a huge amount of income. In fact, you're looking at an annual income of under $30,000 if you receive the average benefit, regardless of your claiming age.
There's a simple reason the average benefit is pretty low. It's not meant to be your only income that you collect as a retiree. Benefits are meant to replace 40% of your income, and you'll need to replace around 80% to 90%.
Of course, if you made more money over your career, your average benefit may be higher since benefits are based on a percentage of what you earned in your 35 highest earning years.
However, even if that is the case, you still are not going to be able to live on your benefit since it's only going to replace around 40% (or less) of what you were earning -- and most likely less since the benefits formula is progressive and replaces a larger percentage of income for lower earners.
Since Social Security isn't going to cut it, no matter how your benefit compares to the average you'll need to supplement your retirement checks with withdrawals from your retirement plans.
As you are working, you should ideally be investing money in your 401(k). You may also have other retirement accounts you are contributing to as well, such as an IRA. You should be able to rely on these accounts as a senior to give you the money you need to combine with Social Security and have a comfortable life in your later years.
