Here is the singlemost important thing to remember about your Social Security benefits: Social Security should be conceptualized as a general financial foundation for your retirement years, but absolutely not as your sole source of retirement income.
The average Social Security benefit for a retired worker in 2007 is only $1,044 per month and $1,713 per month for a worker and his or her spouse. These numbers are determined by the Social Security Administration (SSA) with the goal of keeping beneficiaries above poverty level, albeit barely!
The rule-of-thumb among financial planners is that you will need approximately 70% of your annual income from your working years to comfortably sustain yourself during your retirement. The problem with Social Security is that the benefits will replace only about 40%, on average, of your pre-retirement income. That leaves a 30% shortfall that you will need to make up with pension income or investments.
So start your retirement planning as early as you can, if you haven't done so already, and make sure that you have a realistic understanding of the role Social Security will play in your retirement income picture. For more detailed information on this topic, visit the SSA online or call them toll-free at 1-800-772-1213 (TTY 1-800-325-0778).
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