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How Much Can I Expect to Receive From Social Security During Retirement?

The Social Security System has become a visible political as well as financial issue. The system was started in the 1930s to provide a secure source retirement income and other benefits in the cases of death or disability.

The system is funded with payments from workers and employers with payments going out to retirees and other beneficiaries. It is largely a "pay as you go" system. The controversy has arisen because the number of workers paying in is decreasing and the number of beneficiaries is increasing as the demographics of our country changes.

Some Guidelines
Retirement benefits from Social Security are based on your earnings history, the age when you start receiving benefits and cost of living adjustments. But here are some guidelines that can help with get a ballpark figure.

For a worker that retires in 2005 at the full retirement age (65 plus 6 months) and that had contributed the maximum amount over the years (for 2005, the maximum earnings level is $90,000), his benefit level was about $1,935 per month.

The average benefit for a retired couple in 2005 is $1574.

If a worker elects to start receiving benefits at age 62 (before the "full retirement age") there is a percentage reduction. The full retirement age, which had been 65, is being gradually increased to 67 over the next several years. The amount of the reduction for early retirement benefits is increasing from 20% to 30 over several years.

If a worker retires at age 62 in 2004, his full retirement age would have been 65 plus 10 months and his benefit will be reduced by about 25%.

Social Security retirement benefits are adjusted annually for inflation. The most recent increase was 2.7%.

The Social Security System has started a program of sending annual reports that show earnings, contributions and estimated benefit levels. When you receive your report, review it for accuracy. If there are errors, contact Social Security immediately to get it corrected.

For most people, Social Security benefits will provide only a portion of the income they need to have a comfortable retirement lifestyle. While it is logical to assume that Social Security benefits will continue to be a part of most retirees' income, it is prudent to build additional funds to make sure your retirement is financially secure.