How To Maximize Social Security Benefits
October 26, 2011 by staff
(A) Nothing. I am not receiving and not expect to get, ever.
(B) Not much, perhaps, 120,000 in all my life.
(C) A little, but I do not know how to measure value.
(D) Failure to respond to questions from the audience, because I’m a millionaire Social Security.
If your answer is “D”, you’re probably right.
You can understand why when you visit a neat little book PDF, selected interest rates. It is regularly updated and can be obtained, free, visit the website of the Federal Reserve Bank of Dallas. Go through the 50 pages of dates and fees, and you can follow the rise in interest rates during the 70′s and its slow decline over the years 80 and 90. Then you can mourn for absolute drought we are experiencing now.
As recently as 2000, the performance of an obligation of the five-year Treasury was 6.16 percent. Today the corresponding yield is 1.0 percent. Yields on certificates of deposit, not listed in the PDF, show a similar pattern.
Therefore the safest investment returns are about one-sixth of what they were a decade ago. Put another way, today it takes about six times more in savings to provide the same income. From 10,000 to win and 619 per year in 2000 and now earns only 100 a year. Retired little wonder most of the savings are reduced.
Drought also makes the performance of Social Security benefits massively important … and more valuable. With the average benefit Social Security check each month and in August 1181.60 or 14179.20 to a year, the average retiree needs (are you ready for this?) And 1.4 million in U.S. Treasury of five years required to obtain the same income as he or she now receives Social Security.
Compare this with the average monthly benefit Social Security in 2000, and 840, and 10,080 or a year. At 6.16 percent, and only 162,843 in savings needed to provide the same income as Social Security. Such striking, is not it?
Since workers of 60 years rarely has more than 200,000 and in your 401 (k) is quite clear that Social Security income is extremely important for most income Americans in any way personal savings . Social Security is the elephant in the room at the time of retirement.
This also means you have income from Social Security is a pretty good indicator to have a millionaire’s income in 2011. Of course, being a millionaire is not what it used to be.
Readers who like to exercise their financial calculators are likely to complain of these figures, so I would note that there are more accurate ways to estimate the value of Social Security benefits. If you have and 1.4 million in savings, for example, will continue to pay interest after his death. However, Social Security benefits for when you die, unless you have a spouse with lower benefits. (Your surviving spouse will receive survivor benefits, which will be very close to the larger of the two benefits.)
Viewed this way, a new retiree at age 66 with a check from 1181.60 per month and receive benefits worth about 241,046 and a life expectancy of 17 years, and the total value when the benefit of surviving spouse is included and would be about 354,480. It will be worth more for the people who live long and less for people who do not. That is the current value in the current purchasing power.
In any case, is more than small change. It is more than the average home value. It is more than the vast majority of workers accumulate in their 401 (k) s and IRAs. And it’s worth more than the typical pension is for the shrinking number of workers lucky enough to have them.
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