By Dana Anspach via Iris.xyz
What would you guess your Social Security benefits are worth; a few hundred thousand, maybe?
Would it surprise you to know the average single person living twenty-five years could receive $500,000 or more in total Social Security benefits? Many married couples will receive over a million dollars.
According to the Social Security office, in 2018 the average monthly Social Security retirement benefit was $1,413. That’s $16,956 a year. If you were a high-wage earner, the maximum monthly benefit for someone who had reached Full Retirement Age (determined by your date of birth) was $2,788 – or $33,456 per year. And, you can get even more by waiting until age 70 to begin benefits.
When deciding when to start benefits, you also need to consider inflation. Starting in 1975, Social Security benefits are adjusted up each year with inflation, which means your benefits increase as prices rise (prices as measured by the Consumer Price Index, called the CPI-W).
Historically benefits have increased at an annual rate in excess of 3.5%, although in recent years 2012 – 2016 increases have been less than 2% a year. If you take your $16,956 a year increasing at 2% a year for 25 years, you would receive $543,106 in total benefits. If you received $2,788 a month for 25 years, increasing at 2% a year, the total adds up to $1,071,606.
It’s a big pot of money. By making a wise decision, you can increase the size of the pot you draw from. Let’s take a look at the factors to consider when deciding when to start your Social Security.
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