What kind of pension do Americans receive at different ages

For many Americans, Social Security is more than just money—it's vital financial assistance that helps them make ends meet during retirement. Writes about this Fox Business.

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According to a Gallup poll conducted in April, 89% of current retirees rely on Social Security payments as a primary or secondary source of income. Meanwhile, a record high of 88% of retirees expect to rely to some extent on their Social Security income in retirement.

The amount you receive each month can have a significant impact on your financial well-being. But Social Security benefits can vary greatly for a variety of reasons.

Four factors

While there are more than a half-dozen circumstances that can affect your retirement, four stand out above the rest. Two of the four are your work history and your income history. The Social Security Administration (SSA) considers your 35 years of highest earnings, adjusted for inflation, when calculating your monthly benefit when you reach full retirement age. The more you earn in a given year, the more you will be paid in retirement. Just remember that for every year you work less than 35 years, the SSA will average $0.

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The third important payout factor is your year of birth. It is he who determines the limits of your principal amount, as well as your full retirement age, that is, the age at which you are entitled to receive 100% of your monthly benefit. The full retirement age for baby boomers ranges from 66 to 67, with everyone born in 1960 or later having the full retirement age of 67.

And finally, fourth, age plays a huge role in determining how much you get from social security. Payments can start at age 62 or any other age after that, but SSA encourages patience. Each year that a person postpones receiving benefits, their monthly payment increases by 8% until age 69. All other things being equal, for example, earnings history and year of birth, a person who started receiving a pension at the age of 70 can increase its size by almost 76%, in contrast to a person who retired at 62.

Average Monthly Social Security Benefit by Age

By this link you will find the breakdown of payments provided by SSA as of June 2020 (rounded to the nearest whole dollar).

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The most obvious differences in payments are observed in the first years of receipt. Between the ages of 62 and 70, the average monthly payment ranges from $ 1130 to $ 1612. This huge average gap in benefits can be explained by the fact that workers are awaiting payments. New retirees wait longer to start receiving benefits, which further raises the average benefit for people over 67.

The average retirement benefit has dropped significantly since about age 83. This is due to the fact that women have a longer life expectancy than men. As women are more likely to stay at home to raise children or care for sick family members, their lifelong earning potential decreases. By the age of 83, retired women make up a larger percentage of the total number of recipients.

Three Easy Ways to Increase Your Social Security Benefit

Tens of millions of working Americans know that there are a few simple things they can do to increase their potential monthly pay.

First, waiting is usually a smart choice. Although not receiving payments will not be the best choice for everyone. A June 2019 United Income study found it to be the best choice for a surprisingly large percentage of seniors.

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Secondly, it's a good idea to think about working a little longer. By the time you turn 60, you may have acquired a ton of knowledge and work skills that will lead to higher wages. This higher benefit can be used to replace a lower-income inflation-adjusted year from your teens or 20s, thereby increasing your Social Security benefits.

Third and finally, consider using the secondary Social Security provision SSA-521. Officially known as a “Request to Withdraw,” this review allows retirees who regret their early decision to file to request that it be withdrawn. If approved by the SSA, the retiree will be required to repay all benefits received, but their benefits will again increase by 8% annually. Keep in mind that SSA-521 is only an option for the first 12 months after you start receiving benefits.

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