About 10 years in the past, I attempted logging onto SSA.gov to test my Social Safety advantages. You’d suppose after a long time of paying FICA taxes (6.2% for SS, 1.45% for Medicare), the federal government may make it straightforward to see what you’re entitled to. Nope. As a substitute, the system demanded to bodily mail me a PIN. I attempted thrice over 12 months. Nothing ever arrived, so I gave up.
Then I attempted once more throughout COVID. Similar factor. Good! After 20+ years of working, paying into the system, and saving diligently, I nonetheless couldn’t get into my very own account. I by no means counted on Social Safety anyway, so I chalked it as much as one other instance of my tax {dollars} going… someplace.
Fortunately, the federal government ultimately consolidated login data by means of Login.gov. I reset my password fully on-line, uploaded my driver’s license and a selfie, and – miracle of miracles – lastly accessed my Social Safety dashboard by means of SSA.gov.
When you haven’t established your login but, do it. As a personal finance nerd, it feels extremely satisfying to poke round. When you perceive your Social Safety progress, you’ll be able to higher plan in your retirement.
The truth is, you could be saving $1 million extra or working 5+ years greater than you have to!
My Projected Social Safety Advantages
Under are my estimated month-to-month advantages if I begin at 62, wait till full retirement age (67), or delay till 70:
- 62: $2,641
- 67: $3,751
- 70: $4,651
Since I’m feeling comparatively wholesome at present at age 48, probably the most logical choice is to wait until 67, my full retirement age. My objective is to not solely attain 67, however keep wholesome sufficient to benefit from the payout for many years after. In any case, dwelling longer and having fun with life is the largest return on funding of all.
Advantages are based mostly in your lifetime earnings. Social Safety “indexes” your previous wages for inflation, then averages your highest 35 years to find out your month-to-month profit quantity. For 2025, the 6.2% Social Safety tax applies to earnings as much as $176,100 for workers. If you’re self-employed, you need to pay double.
To qualify for retirement advantages, you want 40 whole work credit. You possibly can earn as much as 4 work credit per 12 months, and in 2025, one credit score is earned for each $1,730 of earnings. So in the event you earn at the very least $6,920 in a given 12 months, you’ll obtain the utmost 4 credit for that 12 months.
These years do not need to be consecutive. When you’ve earned your 40 credit (takes 10 years), you might be thought-about totally insured for Social Safety retirement advantages for all times, even in the event you by no means work one other day.
The extra persistently you labored and the extra you earned, the upper your profit will likely be (inside SSA limits). I’ve technically been paying FICA taxes since 1994, after I worked at McDonald’s in high school for 2 years, so I crossed the 40-credit threshold way back.
Can I Reside Off $3,751 a Month in Retirement?
Surprisingly… I feel the reply is sure.
The profit quantities proven on SSA.gov are expressed in at present’s {dollars}. They don’t embody future COLA (inflation) changes. However as we noticed throughout COVID, Social Safety is keen to maintain up with inflation. 2023 noticed a powerful 8.3% COLA increase. That was an eye-popping bump and gave me hope the system received’t let retirees fall too far behind.
If we assume ~3% annual inflation, my profit in nominal phrases will roughly be:
- ~$4,000/month at 62
- ~$6,500/month at 67
- ~$8,800/month at 70
Constructing a Finances to Reside Solely on Social Safety
If I begin at 67, I’ll obtain $3,751/month, or $45,012/12 months in at present’s {dollars}. In the present day, my household of 4 can’t dwell on that quantity. However in 19 years? It’s extremely attainable assuming a couple of key issues occur:
1. Each Youngsters Develop into Financially Impartial
By 2044, after I’m 67, my children will likely be 27 and 24. In the event that they’ve launched efficiently, they shouldn’t need assistance from the Bank of Mom & Dad. I estimate a 40% likelihood of this taking place, given how house costs have outpaced wage development. Younger adults face a troublesome street to independence, particularly with larger housing prices.
That mentioned, I’ve deliberately purchased a rental property each time one of my children was born. The plan is to carry these properties by means of their faculty years to assist cowl the price of elevating them. And in the event that they determine they need to dwell in San Francisco as adults, I’ll hire the properties to them at 30% of their gross earnings, which feels each truthful and financially sustainable. In the event that they don’t find yourself needing the housing, I’ll merely proceed utilizing the rental properties to assist fund our retirement.
2. We’re 100% Debt-Free
That is extraordinarily possible. I solely have one rental property mortgage left, which I’m on observe to repay by 2030. I might pay it off now with my Treasury bond holdings, however since Treasuries yield ~2% greater than my mortgage fee, I’d quite maintain the unfold and earn free cash.
3. We Relocate to Honolulu To Save Cash
Even and not using a mortgage on our San Francisco house, property taxes and upkeep exceed my Social Safety profit. The answer is to maneuver into my mother and father’ property in Honolulu. The place is paid off, the land has a number of properties, we spent $40,000 updating the in-law unit, and I’d be splitting property taxes and upkeep prices two or 3 ways. Hawaii’s property tax rate is the bottom in America.
If these three issues occur, I’m 90% assured I might dwell off $3,751 a month gross. Here is a sensible finances per thirty days:
- Core dwelling bills: $1,500
- Meals: $1,000
- Transportation: $300
- Leisure: $500
- Miscellaneous: $200
- Complete: $3,400 (vs. $3,751 month-to-month gross SS profit)
My Spouse Will get Social Safety Too
Assuming my spouse and I are each nonetheless round and collectively at 67, she’ll have a comparable profit. Immediately, we’re not speaking about $3,751/month, we’re speaking $7,000–$8,900/month, relying on when she begins taking Social Safety. If she takes Social Safety at 64 after I’m 67, then our mixed Social Safety advantages will likely be roughly $7,100/month.
With two folks dwelling collectively, housing and utilities don’t double, so the spending effectivity is big. After core dwelling bills, we could have $5,000+ a month left. Lots for meals, journey, and hobbies.
Positive, we would not cruise Europe with a balcony room twice a 12 months, however one good trip yearly or two? Simply doable.
Hawaii gives so many free or cheap actions, equivalent to seashore days, tennis, pickleball, and mountain climbing, {that a} high-rolling retirement isn’t mandatory.
Even spending $100/day on meals ($3,000/month) nonetheless leaves $2,000+ for every thing else. With out debt and childcare bills, life will get a lot simpler to afford. On this state of affairs, I am 98% sure we are able to dwell off each our Social Safety advantages.
Add On Tax-Advantaged Retirement Accounts, Rental Properties, and Brokerage Accounts
Till at present, I by no means severely thought-about the concept Social Safety might cowl 100% of our retirement bills. As a substitute, my complete focus has at all times been on maxing out my 401(k), constructing a rental property portfolio, rising our taxable brokerage account, and investing in enterprise capital to fund our conventional retirement years.
However after operating the numbers, it’s apparent I’ve saved manner greater than mandatory. And unusually, despite the fact that I retired early at age 34, it would nonetheless not have been early sufficient!
Due to a roaring bull market in each shares and actual property since 2012, after I left finance, my investments have compounded faster than my spending and income. Add in supplemental earnings from side hustles (e.g., Uber driving) and this web site, and I’ve been grinding for no purpose.
And now, with Invoice Bengen raising the safe withdrawal rate from 4% to 5%, it reinforces the concept we might all loosen up and loosen up extra. If you’re an everyday Monetary Samurai reader, I am fairly certain most of you might be accumulating extra wealth than you want as effectively.
Social Safety Millionaires In The Making
My estimated $45,012 in annual Social Safety advantages beginning at age 67 (in at present’s {dollars}) is equal to having $1,125,300 in capital, assuming a 4% withdrawal fee. I assume a lot of you’ll possible have Social Safety advantages on this identical vary.
In different phrases: we would all be Social Safety millionaires. With roughly 65% of People proudly owning properties, and the overwhelming majority of house owners over age 62 being mortgage-free, the narrative of an impending “retirement disaster” could also be overstated.
Most People even have financial savings and taxable investment accounts to complement Social Safety. Some even have valuable lifetime pensions too. When taken collectively, the retirement image for many individuals is probably going a lot more healthy than the headlines counsel.
Listed below are the opposite advantages of Social Safety price noting.
Understanding Social Safety Survivor Advantages
When you cross away, survivor advantages could go to your:
- Partner
- Minor or disabled youngsters
- Dependent mother and father
Survivors sometimes obtain 75%–100% of your full profit relying on their relationship and age.
For single-earner households, this safety is big. However these advantages alone often aren’t sufficient to completely change earnings, which is why time period life insurance coverage stays important for younger households.
What If You’re in a Lengthy-Time period Relationship however Not Married?
When you and your accomplice aren’t legally married, survivor advantages grow to be difficult. The SSA usually is not going to deal with a home accomplice as a partner except your state acknowledges the connection and you’ll be able to show it with documentation.
Even then, it’s not assured.
If you would like your accomplice to obtain survivor advantages, the most secure choice is to get legally married a 12 months earlier than you suppose you will cross. Nevertheless, given that may be tough to determine, maybe shoot to get married earlier than 62.
My Survivor Profit Quantities
If I die this 12 months, my household may obtain:
- Minor youngster: $3,024
- Partner caring for youngster below 16 or a disabled youngster: $3,024
- Partner at full retirement age: $4,033
- Complete max household profit: $7,058
- One-time loss of life profit: $255
Understanding Social Safety Incapacity Advantages (SSDI)
SSDI is earnings safety in the event you grow to be unable to work as a result of a situation anticipated to final at the very least 12 months or lead to loss of life.
To qualify, you should:
- Have a extreme medical situation that forestalls you from doing earlier work and every other appropriate work.
- Have sufficient work credit (often 5 of the final 10 years; youthful employees want fewer).
Most SSDI recipients obtain $1,000–$2,000/month, although advantages fluctuate.
My SSDI estimate is $4,033/month.
It’s possible you’ll need to complement SSDI with non-public incapacity insurance coverage when you’ve got dependents.
Social Safety Medical Advantages: Medicare
Medicare is the principle healthcare security internet for retirees and sure disabled people. You qualify by:
- Turning 65, or
- Receiving SSDI for twenty-four months
Medicare has 4 elements: A (hospital), B (medical), C (Medicare Benefit), and D (prescriptions). It covers rather a lot however not every thing, particularly long-term care, dental, imaginative and prescient, and listening to.
Retirees typically complement with Medigap or Medicare Benefit.
Medical prices can destroy even sturdy retirement plans, so Medicare gives an important baseline.
Social Safety Isn’t Wonderful, However It’s Far Higher Than Nothing
Each private finance fanatic has run the mathematics: in the event you invested your FICA taxes in an S&P 500 index fund over a profession, you’d possible retire with a number of occasions the worth of your Social Safety profit.
However right here’s the fact: Most individuals would by no means persistently save and make investments that cash on their very own.
The pressured financial savings facet helps stop aged poverty. Homeownership works equally: by forcing people to pay down principal, they accumulate wealth they won’t in any other case construct.
For many of my profession, I handled Social Safety as irrelevant in my retirement planning. However now, at 48, really taking a look at my dashboard, I’m warming as much as the system.
My uncle retired from the federal authorities this 12 months and commenced taking Social Safety at 70. It makes a large distinction in his way of life. He was the one who advised me in regards to the new Login.gov system too whereas I used to be in Honolulu.
As I get nearer to eligibility, I’m extra appreciative of what this profit can do. Taxes are nonetheless disagreeable, however at the very least with FICA, we do get one thing significant in return.
Readers, might you reside off your Social Safety advantages? If not, what gaps do you have to shut earlier than you get there? When was the final time you checked your Social Safety dashboard?
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