|Written by Dr. Harold Wong|
Social Security and baby boomers’ retirement plan
For baby boomers born between 1943-54, full retirement age for full Social Security is age 66. This contrasts to the age 65 that was FRA for decades since the Social Security Act was passed in 1935.
For those born in 1955, FRA is 66 plus 2 months. For every year after those born in 1954, FRA increases by 2 months until FRA is 67 for those born 1960 and later.
For those whose FRA is 66, you get 25 percent less if you start SS benefits at 62. For every year after 66, you get 8 percent more for every year you wait until age 70.
Note: Only 1.2 percent of men and 2 percent of women wait until age 70 in order to get 32 percent more than if they took SS benefits at age 66.
Example: If you would have received $2,000 monthly with an FRA of 66, you receive $1,500 at 62 or $2,640 monthly if you wait until age 70.
There is a major difference in sources of retirement funds for those retirees versus nonretirees.
Among those already retired, 49 percent said that a major source of funds was from a work-sponsored retirement plan; 48 percent from Social Security; 38 percent from a 401(k), IRA or other retirement savings account; 32 percent from the equity in their house; 30 percent from individual stock or mutual funds; 25 percent from other savings such as savings accounts or CDs; 19 percent from annuities or insurance plans; 7 percent from part-time work; and 6 percent from inheritance money.
In contrast, for nonretirees, 74 percent said that a major source of funds for retirement was a 401(k), IRA or other retirement savings account; 40 percent from individual stock or mutual funds; 39 percent from a work-sponsored pension plan; 36 percent from home equity; 30 percent from other savings such as a regular savings account or CDs; 28 percent from SS; 17 percent from annuities or insurance plans; 16 percent from part-time work; and 7 percent from inheritance.
(Source: Wells Fargo Gallup Poll: Investor and Retirement Optimism Index, Feb. 1-8, 2011.)
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