No. 1: Know what Social Security will provide. Social Security is the foundation of retirement planning for most American workers. More than 95 percent of workers are covered under Social Security and more than 30 million Americans now get monthly Social Security retirement benefits.
How much could you receive from Social Security when you retire? If you're age 25 or older and you work, you should be receiving a Social Security statement in the mail each year about three months before your birthday. The statement shows how much you paid in Social Security taxes through the years and what you might receive in benefits at various retirement ages. It is recommended that you keep a copy of the statement with your financial records.
No. 2: Know what you must save. Social Security never was intended to be your only source of retirement income. Along with private pensions and savings, it was meant to be part of a " threelegged stool" that supports your financial future. Most financial planners tell people to figure out how much money they'll need in retirement - usually 70 to 80 percent of their pre-retirement incomes. But, for average wage earners, Social Security will replace only about 40 percent of what they make before they retire.
Only a little less than half of workers have private pensions, and about a third have not yet set aside any money
No 3: Don't forget about health insurance. If you plan to retire early, you should make sure that you'll have either employer- provided or private health insurance, since " retirees" are not eligible for Medicare until age 65.
If you intend to retire at age 65 or older, you need to understand how Medicare Part A and Part B coverage work.
You also should know that you would be responsible for Medicare premiums, deductibles and coinsurance.
The monthly premium paid by beneficiaries enrolled in Medicare Part B, which covers physician services, outpatient hospital services, certain homehealth services, durable medical equipment and other items, is $96.40, and can rise each year.
Keep in mind that a new prescription drug program began in January 2006. And beneficiaries who meet income and resource limits can get extra financial help in meeting the monthly premiums, annual deductibles and prescription co-payments under the new Medicare prescription drug plan. If you want more information about Medicare, visit www.medicare.gov, or call 1-800-633-4227.
Reaching age 65 or full retirement age in 2008? - If you will turn 65 or reach full retirement age in 2008 and have not filed a Social Security or Medicare application, we can provide you with information that will be helpful in determining when to file an application. Mail us the following information:
- Your name.
- Social Security number.
- Estimated 2007 earnings.
- Estimated 2008 earnings.
- Complete mailing address.
- Telephone number (both
home and work).
-Date of birth.
- If you plan to retire in 2008, month in which you would.
- Spouse's Social Security number.
- Spouse's date of birth.
- If spouse is deceased, give date
of death.
Send it to: Your Social Security, Social Security Administration, 3885 Main St., 3rd Floor, Bridgeport CT 06606. Attn: A. Renzoni. Anthony Renzoni is district manager of the Bridgeport office of the Social Security Administration.
His column appears every Monday.
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