Should You Count On Social Security

In 2011, nearly 35 million retired American workers received an average of $1,181 average monthly benefit in Social Security retirement benefits. In fact, Social Security is the major source of income for most of the elderly. But by 2036, there will be almost twice as many older Americans as today -- from 41.9 million today to 78.1 million -- and only 2.1 workers for each beneficiary (currently there 2.9).

If you're worried about the state of social security, you're not alone. Nevertheless, Social Security is still an important part of your retirement planning. The best way to take control is to find out what your estimated benefits will be. You can do this by contacting the SSA through their website.

You'll receive a report showing your estimated annual benefits at age 62, at your "normal" retirement age (65 to 67, depending on your year of birth), and at age 70. These are estimates of future benefits, with an actual dollar amount at that time.

Taking Steps To Protect Yourself
There are some important steps to take when you get your report. First, check your reported earnings for each year you worked. Just like any other bureaucracy, mistakes are always a possibility.

Second, take a good look at how your benefit varies according to your retirement age. If you retire at 62, generally you will only get 80% of your benefits at normal retirement age. Conversely, you will get an extra 8% for each year you work past your normal retirement age. If you're married, your non-working spouse will get 37.5% of your benefits if you retire early and 50% at your normal retirement age.

Remember that the full retirement age is no longer necessarily 65. The full retirement age is increasing gradually to age 67 by the year 2027. Looking at your various retirement benefits, you can figure out the best time for you to start taking Social Security.

Third, decide how much you want to rely on Social Security. The younger you are, the more likely it is that your benefits will be less than projected. As a safety measure, you might assume your actual annual benefit would be 75% of current estimates. Whatever your method, plug that Social Security number into your retirement needs analysis to see how much you will have to save on your own to provide the income you want. Then make a plan to save even more than that, if you can.

One final tip:
When you deal with the Social Security Administration, do it online or in writing. If doing so is impossible, go to a Social Security office. For future reference, always take notes and get the employee's name and ID number of the person you spoke with.

You won't be penalized if you receive incorrect information from the employee and you have proof. If you are not happy with the Social Security Administration's decision about your situation, you can file a "reconsideration." You can also ask to have any deadlines waived until your problems are resolved.

Social Security was never designed to pay for a life of luxury, but even with its current fiscal woes, you can probably count on something when you retire.