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Baby Boomers, Retirement, and Social Security – Part 1

Baby Boomers represent approximately 30% of the U.S. population today – that’s approximately 87.5 million people!  And most of those Boomers have just retired or will be approaching retirement in the not too distant future.  Needless to say, Social Security ranks high on their list of concerns.  This posting addresses three key questions that Boomer’s have regarding Social Security.

1. Will Social Security be there for me?

The Old Age, Survivors and Disability Insurance Trust Fund (OASDI) that funds Social Security is still increasing.  As of 12/31/10, the fund was at $2.429 trillion.  As of 12/31/11, the fund had grown to $2.524 trillion.  Long-term projections regarding funding for Social Security (assuming no government reform) are as follows:

2013-2021:  100%          2034:  77%          2085:  74%

Bottom line, Social Security will, in all likelihood, be there for Baby Boomers.  While the government is reviewing Social Security reform options, Boomers’ benefits are unlikely to be affected.

2. How much can I expect to receive?

What you receive depends on

a. How much you earn over your working years.  The Social Security Administration calculates your pension based on your highest 35 years of earnings.

b.  Your age when you apply for benefits.

If you retire at full retirement age, you will be entitled to 100% of your pension.  The following chart states what qualifies as full retirement age based on birth year.

66 and 2 months
66 and 4 months
66 and 6 months
66 and 8 months
66 and 10 months

Please note, you may start taking your Social Security pension as early as age 62.  However, starting your pension before your full retirement age will result in a permanent pension reduction.  For example, if you were born between 1943 and 1954, and you start receiving your pension at age

62: you will receive 75% of your pension;     63: you will receive 80%;     64: you will receive 86.7%;     65: you will receive 93.3%;

66 – your full retirement age: you will receive 100%.

3. How can I maximize my benefits?

While deciding when to start taking your Social Security pension is a very personal decision, here’s an important piece of information for you to consider.  Holding off on your pension for one year or more after you’ve reached your full retirement age, will increase your pension significantly.  For every year you delay (up till the age of 70), your pension will increase by 8%.

For example, your full retirement age is 66 and you start receiving your full pension of $2,466.  But, if you wait until you are

67 – your monthly pension will be at 108% – $2,663;        68 – your monthly pension will be at 116% – $2,861;

69 – your monthly pension will be at 124% – $3,058;        70 – your monthly pension will be at 132% – $3255.

Please note, there are no pension increases beyond 132%.

So, if maximizing your monthly Social Security pension is one of your retirement priorities, delaying the onset of your pension is certainly something to consider.

We hope you’ll join us on our upcoming posts where we’ll address Social Security pension issues pertaining to married couples, and to divorced and widowed individuals.

Getting Legal Help

Experienced Estate Planning Attorney, Elga A. Goodman, can work with you to meet your needs and those of your loved ones. Contact us today at 973-841-5111.





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