Retirement planning can be challenging because there are many variables involved that are really out of the control of the individual. We simply cannot predict with certainty how the economy is going to go, and many people experienced retirement planning setbacks during the financial meltdown came to a head in 2008. But one thing that would seem as though it is a constant for all Americans when they reach retirement age is Social Security.
Of course we have to move forward with our retirement planning efforts with the full expectation of receiving Social Security and Medicare benefits but there is cause for concern, and it may be unwise to keep your head in the sand. Many people in Washington appear to be extremely intent on slashing budgets to reduce the deficit and Medicare, Social Security, and Medicaid are very costly programs. Plus, when you add in the astounding statistic that 10,000 people are applying for Social Security every day and that this is expected to continue for the next 20 years the strain on the system can only get worse before it gets better.
We we’ll see how Social Security funding holds up over the years, but under the Social Security regulations as they stand today full retirement age is between 66 and 67 for people who were born in 1943 and later. However, if you want to make the most of your Social Security benefits you have the option of delaying your retirement.
Each year that you work beyond your full retirement age you earn delayed retirement credits that increase the amount of your benefit when you do in fact retire. For people born in 1943 and after the amount of increase is 8% per year for every year that you work beyond your full retirement age. In addition, Social Security benefits are calculated based on your 35 highest earning years. So if you were to work three years beyond your full retirement age those years could supplant three years early in your career when you were making less money and your benefit would rise as a result.