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Here’s How to Find Out How Much Social Security Income You’ll Receive

Editorial Note: The editorial content on this page is not provided or commissioned by any financial institution. Any opinions, analyses, reviews, statements or recommendations expressed in this article are those of the author’s alone, and may not have been reviewed, approved or otherwise endorsed by any of these entities prior to publication.

At what age will you retire? How much can you expect to receive each month when you do? These are important questions even if you are decades away from retirement, and there’s an easy way to get answers anytime. We’re going to show you how to get your Social Security benefits statement online and what to do with it once you’ve got it.

A little background:

Depending on your age, you may remember getting a printed Social Security benefits statement in the mail. Prior to 2011, the Social Security Administration (SSA) mailed statements to all workers every year. Those annual mailings were discontinued in 2011 as a cost-saving measure. The following year, the SSA made the statements available online, but their decision caused a bit of an uproar. Despite the agency’s outreach campaign, far fewer people registered for an account than there were eligible workers. So in 2014, Congress required the agency to resume sending printed statements every five years to workers age 25 and older who hadn’t registered for an online account.

That schedule remained until earlier this year when the agency announced that due to budget restraints, paper benefit statements will only be mailed to people who are 60 or older, have not established an online account, and are not yet receiving Social Security benefits. Simply put, don’t expect to get a printed statement anytime soon.

How to get your Social Security benefits statement

Accessing your Social Security benefits statement online is pretty simple, as long as you have an email address and can provide some basic identifying information.

First, go to ssa.gov/myaccount and click on “Sign In or Create an Account.”

If you’ve never created an online account with the SSA, you’ll click on “Create an Account.” If you’ve set up an account before, you won’t be able to create a new account using the same Social Security number. If you’ve forgotten your username or password, the SSA website offers tools to help recover them.

When you select “Create an Account,” the site will lead you through a few questions to verify your identity. You’ll need to provide personal information that matches the information on file with the SSA as well as some information matching your credit report.

Ryder Taff, a Certified Financial Adviser with New Perspectives, Inc. of Ridgeland, Miss., helps many of his clients set up Social Security accounts and says the questions often have to do with past residences or vehicles that may have been registered in your name.

If you have trouble setting up your account online, you can call the SSA for help at 1-800-772-1213.

Information in a Social Security benefits statement

Your Social Security benefits statement provides several valuable pieces of information:

  • A record of your earnings, by year, since you began having Social Security and Medicare taxes withheld.
  • Estimated retirement benefits if you begin claiming Social Security at age 62, full retirement age, or age 70.
  • Estimated disability benefits if you became disabled right now.
  • Estimated survivor benefits that your spouse or child would receive if you were to die this year.

Here’s a sample of what your benefits statement will look like:

Keep in mind that the estimated benefits shown are just that — estimates. The amounts shown are calculated based on average earnings over your lifetime and assume you’ll continue earning your most recent annual wages until you start receiving benefits. They are also calculated in today’s dollars without any adjustment for inflation. The amount you receive could also be impacted by any changes enacted by Congress from now until the time you retire.

What to do with your Social Security benefit statement

It’s a good idea to check your earnings record for errors once per year. It’s not uncommon for earnings from certain employers or even all of your earnings from an entire year to be missing, and you’ll want to get that corrected right away because benefits are calculated on your highest 35 years of earnings. “Any missing years will be just as damaging as a zero on a test was to your GPA,” Taff says. “Gather your documents and correct ANY missing years, even if they aren’t the highest salary. Every dollar counts!”

If you do spot any errors, grab your W-2 or tax return for the year in question and call the SSA at 1-800-772-1213. You can also report errors by writing to the SSA at:

Social Security Agency
Office of Earnings Operations
P.O. Box 33026
Baltimore, MD 21290-3026

Reading your statement is also a good reminder of how much you need to save for retirement outside of Social Security. Chances are, you won’t be happy living on just your Social Security income in retirement.

The good news is, the longer you delay taking your benefit, the higher your annual benefit will be. You can begin taking Social Security retirement benefits at age 62, but your payments will be smaller than they would be if you waited until full retirement age (FRA). Currently, your annual benefit increases by 8% for each year you delay taking your benefit from FRA until age 70.

Colin Exelby, president and founder of Celestial Wealth Management in Towson, Md., says that using your Social Security benefits statement can be particularly useful for retirement planning for couples. “Depending on your age, health, family health history, and financial situation there are a number of different ways to claim your benefits,” he says. “Each individual situation is different, and many couples have different views on the decision.”

If you are nearing retirement, you can use your benefits statement to work with a financial adviser to help you maximize total benefits, or run through various scenarios using a free online tool like the one provided by AARP.

Setting up your Social Security account is simple, free, and helpful for retirement planning, but it’s also a good security measure. It’s impossible to set up more than one account per Social Security number, so registering your account is a good way to prevent identity thieves from establishing an account on your behalf.

Take the time to set up your Social Security account and find out how much you might be entitled to receive in benefits. It could help you feel more empowered to take charge of your retirement plan.

Advertiser Disclosure: The products that appear on this site may be from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all financial institutions or all products offered available in the marketplace.

Janet Berry-Johnson
Janet Berry-Johnson |

Janet Berry-Johnson is a writer at MagnifyMoney. You can email Janet here

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Retirement

Millennials Have More Appetite for Stocks Than Reports Suggest

Editorial Note: The editorial content on this page is not provided or commissioned by any financial institution. Any opinions, analyses, reviews, statements or recommendations expressed in this article are those of the author’s alone, and may not have been reviewed, approved or otherwise endorsed by any of these entities prior to publication.

millennial retirement savings
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Are millennials afraid of the stock market? This cohort came of age at the height of the Great Recession, and some recent media reports suggest that this has made young adults more reluctant to put their money into the markets.

A new analysis from MagnifyMoney, however, shows that millennials aren’t exactly allergic to “risky” investments such as stocks. We examined 20 years of workplace savings account data from the Federal Reserve’s Survey of Consumer Finances and compared millennials’ investing habits with prior generations of young savers.

Key findings

  • In 2016, millennials had 60.3% of retirement accounts like IRAs and workplace savings accounts like 401(k) plans allocated to stocks or stock funds. This means millennials have 8 percentage points more of their retirement account funds invested in stocks than those 53 and older — the widest gap since 2001.
  • In general, exposure to stocks (equities) has trended downward over the past 20 years. In 1998, all generations had an average of at least 60% of their workplace retirement savings in stocks and stock funds. In 2016, millennials were the only age group who allocated more than 60% of retirement assets to stocks and stock funds.
  • How investors view their tendencies and what they actually do can be two different things. Some millennials claiming they are risk-averse (and thus claim they don’t invest in stocks) may unknowingly own stocks through target date funds (TDFs) and other multi-asset class investments in their retirement plan.

Millennials’ stock-heavy portfolios in line with conventional advice to young investors

Overall, millennials have more of their retirement funds invested in stocks and stock funds than older savers. Here’s a look at the allocation of retirement account assets across millennials (ages 35 and younger), Generation Xers (ages 35 to 51) and baby boomers (ages 51 and over).

In 2016, millennials had, on average, 60.3% of their retirement savings in stocks and stock funds, compared with just 53% for Generation Xers and 52.3% for baby boomers.

This trend of millennials allocating a larger portion of savings to higher-risk or more volatile assets such as stocks is actually in line with conventional retirement planning advice. Younger workers are advised to be more aggressive investors — with decades left to save and weather market ups and downs, they can afford to front-load risk (and reward) today.

Older generations, on the other hand, are advised to allocate retirement funds to less volatile assets as they get closer to retirement age. Baby boomers, in particular, might be planning to live off of retirement savings soon — or might already be relying on those savings. So it’s important to shield retirement savings from high-risk and volatile investments.

Across age groups, today’s investors are choosing stocks less

Overall, this analysis shows that today’s investors are less likely to have a large portion of retirement savings allocated to stocks and stock funds. Here’s a chart that compares the percentage of retirement savings allocated to stocks among age groups, over time:

Stock allocations across all three age cohorts show a largely downward trend, with current stock investments among the lowest levels reported.

Two major changes since 1998 may explain these shifts better than differences in generational risk aversion: the decline of workers with pensions and the rise of target date funds.

TDFs are playing a role in “right-sizing” asset allocations based on age, including those of millennials, who have had access to them since the beginning of their saving careers.

Meanwhile, most private-sector workers today only have defined contribution plans (401(k)s), and not defined benefit (DB) plans.

Major market ups and downs also correlate to some of the trends in this graph above, too. Stock allocations rose in the late 1990s, for example, as the dot-com bubble boomed — and fell in 2000 following its burst. Another small dip in stock investing is seen from 2007 to 2010, in line with the Great Recession and following recovery.

How to start investing in stocks

Whatever your age, buying stocks can be a smart way to grow your net worth and build a secure financial future. However, weathering stock market volatility isn’t always easy — and you’ll want to make sure your stocks strategy is in line with the rest of your financial goals.

If you’re interested in adding stocks to your investing or retirement savings strategies, here’s where you can begin.

Learn the stock market lingo. The world of stocks can seem complicated at first, so picking up on common stock terms can help you make sense of options. You should figure out what stock funds and exchange-traded funds are, for example, and know the difference between preferred and common stocks.

Set your stock investing goals. It’s important to make sure you align your stock investments with your bigger goals. Maximizing your 401(k) funds for a retirement that’s 30 years away will call for a much different investing strategy than if you’re investing in short-term savings. If you know what you want to accomplish by investing, you can choose stocks and funds that are most likely to make that happen.

Research stocks and funds. Once you’re aware of the types of stocks, funds and other assets you can buy, you can look for specific shares that you think are a smart buy. You can research how stock prices are set, and how you can evaluate whether a stock is overpriced or undervalued. Keep an eye out for deals you think are good, and figure out which ones would match well to your investing goals.

Review your account allocations. Many investors have a 401(k) or IRA but might not know how their funds are invested within those savings accounts. Revisit your retirement accounts to see if you want to adjust your allocations for new contributions. You might even want to rebalance your portfolio, selling some assets and buying others, to align with your targeted returns (and risk).

Set up a brokerage account. Most investors can’t buy and sell stocks directly — they’ll need a brokerage account to do so. A traditional broker can be an affordable way to get started — just look for one with low fees to ensure that your returns aren’t eaten up by investing costs.

Download an investing app. Downloading an investing app can be a smart and simple way to get started. Some of the best investing apps can help you analyze stocks, trade and manage investments and even find more funds to invest. Robinhood, for example, charges no commission fees on trades. Or try Acorns, where you can link your checking account to round purchases up and invest the change.

Stay cautious when getting started with stocks. No matter how well-researched or experienced an investor you are, no one can predict the future. As a new investor, however, it’s easy to make rookie mistakes that can cost you big. Keep in mind that every investment you make carries a risk of loss, so start investing a little bit to get comfortable while figuring out the right investing strategy for you.

These tips can get you started if you want to invest in stocks, but make sure you aren’t overlooking other ways to invest.

In some cases, stocks won’t be the best way to invest your funds and keep them growing. If you’re stocking away money for a shorter-term goal, you might want to consider a certificate of deposit. And a savings account is an old favorite if you want to safely store emergency funds or keep your funds easily accessible.

Adding stocks to your investing and money management strategy can be a move that pays off big. The U.S. stock market has consistently performed well, and lots of people have grown their wealth and net worth by investing their funds here. Start small and simple, investing what you can afford to each month, and you could see the effects add up over time.

Methodology

MagnifyMoney examined 20 years (1998 to 2016, inclusive) of workplace savings account data from the Federal Reserve’s Survey of Consumer Finances (SCF) to determine if millennials (young adults ages 35 and under in 2016) are more risk-averse than prior younger savers.

Advertiser Disclosure: The products that appear on this site may be from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all financial institutions or all products offered available in the marketplace.

Elyssa Kirkham
Elyssa Kirkham |

Elyssa Kirkham is a writer at MagnifyMoney. You can email Elyssa here

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Retirement

The Average Retirement Savings of Millennials Isn’t Enough

Editorial Note: The editorial content on this page is not provided or commissioned by any financial institution. Any opinions, analyses, reviews, statements or recommendations expressed in this article are those of the author’s alone, and may not have been reviewed, approved or otherwise endorsed by any of these entities prior to publication.

The Average Retirement Savings of Millennials Isn’t Enough

A new MagnifyMoney analysis of recent Federal Reserve data reveals that millennials aren’t saving enough for retirement. This might not be shocking on its own, but the data also reveals that the gap between what millennials have saved compared with what they should be saving is surprisingly wide.

To set our benchmark, MagnifyMoney used the guideline promoted by retirement industry experts, such as Fidelity, that workers should have roughly two times their annual income in retirement savings by age 35.

We then compared the earnings, savings and ages of millennials as reported in the Federal Reserve’s Survey of Consumer Finances to see whether they are hitting that mark.

Here’s what our dive into the data revealed about millennials’ retirement savings.

Key findings

  • The median 2016 retirement savings level for households headed by 30-somethings was about $23,000, while the median income level was $55,400. This means that typical millennials in their 30s have saved just 41% of their income.
  • Based on that level of income, median households should have saved $112,000, according to a common rule of thumb suggested by retirement plan administrators and financial planners. That’s almost five times more than the actual median savings of $23,000.
  • This shortfall isn’t specific to the current cohort of savers in their 30s (millennials). Prior surveys show a persistent shortfall in retirement savings among 30-somethings in previous generations, too.
  • While high earners are saving slightly more than median or average earners, they still fall short of retirement savings guidelines. Recent data show 30-something households with income at the 90th percentile — $146,000 — have saved roughly 1.1 times their income ($160,000) in retirement accounts when the rule of thumb suggests that figure should be $292,000.

Millennials are 80% behind on retirement savings


Unfortunately, millennials’ retirement saving efforts are far behind the recommended benchmark. The median income for workers in their 30s is $55,700 per year. This puts the retirement saving target at around $111,400 by age 35.

The actual savings are far behind that, however, with the median retirement savings at just $23,000. In fact, a typical millennial has saved only 40% of their annual income at age 35. This is just about one-fifth of the amount they should have saved. (Average retirement savings levels are similarly short).

Median earners in their 30s aren’t saving nearly enough. But perhaps more surprisingly, a better paycheck doesn’t seem to help much, as even high-earning households are coming up short.

High earners save more, but are still behind

High earners do a better job saving for their golden years than their median-earning peers. This makes sense, as higher-income households will have more funds at their disposal that they can use to save.

But even high-income millennials still fall short of the target of saving twice their incomes. Part of that is because earning more results in higher salaries, which also raises the target amount they should save.

In 2016, households earning at the 90th percentile — those earning about $146,000 or more per year — had saved $160,000 so far for retirement. That might seem impressive since it’s nearly seven times the $23,000 median retirement savings balance among their cohort.

But based on their level of income, the retirement savings standard suggests they should have close to $300,000 saved. Yet these high earners are around five years behind on their savings, having saved just 1.1 times their annual salary.

Of course, these numbers won’t reflect every saver’s individual progress. A household that falls in line with the median retirement savings of $23,000 with an annual income of $20,000 might actually be doing OK. Or they might earn $200,000, and be even further behind than most.

Other households might have their retirement savings right on target for their 30s or even be saving more aggressively with the aim of retiring early. Overall, however, it’s safe to say that millennials whose retirement savings are on or ahead of schedule are the exceptions to the undersaving trend.

Millennials’ retirement savings are on par with previous generations’

Millennials are way behind the ideal benchmarks for their retirement savings, and that’s worrying. But do these millennials have it worse than past generations?

We took a look at the historical Federal Reserve data going back to 1998 to find out how millennials’ retirement savings levels compared with previous generations’ savings habits.


As this chart shows, millennials are actually saving better than previous cohorts of 30-somethings. This could reflect the conservative money management attitudes found among many millennials. After coming of age in the Great Recession, this cohort saw the importance of personal fiscal responsibility.

The average retirement savings for millennials in 2016 is $64,000, which is 14% higher than the $56,000 30-somethings’ average retirement savings in 1998 (all figures are in 2016 dollars).

Interestingly enough, millennials are saving more without earning more than previous cohorts — U.S. wages haven’t grown much in that time.

On top of stagnant pay, millennials have also faced historically higher levels of student debt. The average student debt among recent graduates was $39,400, and a typical monthly student loan payment for a millennial is $351. With this student debt, millennials have had fewer discretionary funds they could use to make retirement savings contributions.

The fact that millennials’ savings habits are outpacing previous generations despite these financial obstacles is a promising trend, but it still might not be enough.

The guideline to have twice your salary saved by 35 is, admittedly, an aggressive goal — one that 30-somethings have been falling short of for the past 20 years. But it’s what millennials should be shooting for to ensure a comfortable and financially secure retirement.

How millennials can catch up on retirement savings

If you’re a millennial, you might be wondering how your retirement savings stack up — and if you’re behind, what you can do to make up for lost time.

The first thing to do is figure out where your retirement savings “should” be, according to this guideline. If you’re 30, this will simply be equal to your annual salary; for 35-year-olds, it will be twice that amount.

For every year in between or above, you can simply add on an additional 20% of your annual income. A 38-year-old, for example, should be shooting to have 2.6 times their annual income in retirement savings accounts.

Once you have your number, start planning for retirement and taking steps to catch up. Here are some ways you can start saving more.

  • Take advantage of employer-provided retirement plans. If your employer offers a retirement savings plan, such as a 401(k), it can be an easy and simple way to contribute through your paycheck.
  • Contribute enough to get the full employer match. Many employers will include retirement savings matching in their benefits package. This usually means that they will deposit extra funds into your retirement account to match your own contributions, typically capped at a certain amount. Find the details about your employer plan and contribute at least enough to take advantage of this full match.
  • Open an individual IRA. You don’t need an employer to open a retirement savings account, however. Almost anyone can open an IRA or Roth IRA and start contributing to it on their own.
  • Get debt costs and payments under control. If you have student loans, credit card balances, or other debt, these monthly payments and interest costs will limit your ability to save for retirement. Look for ways you can decrease the costs of your debt, such as consolidating credit cards or refinancing student loans to lower interest rates. Prepaying debt can also be a smart way to avoid interest charges and get rid of debt, freeing funds up to use for retirement savings.
  • Shoot to save 15% or more. As you might have figured out, saving a year’s worth of earnings every five years requires some intense saving habits. Of course, these funds will be invested and generate growth and returns that will do some of the work for you, so you can save a little less than 20% of your gross income. Saving 15% of your annual earnings is the typical suggestion.
  • Increase your savings rate a little at a time. If saving 15% feels out of reach, start smaller. Increase your retirement contribution rate by just 0.5%-1%. Then give yourself a few months to adjust, then raise it again and repeat until you’ve reached your target retirement savings rate. This method can help you ease into higher savings and find the right amount to balance retirement contributions with today’s costs.
  • Save “extra” funds when you can. If you’re behind on retirement savings, you can use extra income to play catch up. Instead of using bonuses and raises as more take-home pay, for instance, you can contribute this increase in pay to retirement savings.

It’s not too late to start saving for retirement, and every dollar you contribute now will count more than what you’d save later. That’s because saving for retirement in your 30s gives these funds over three decades to grow and for that growth to compound — time and money you simply can’t make up for later.

Take a look at your retirement savings and find one thing you can do to save more. Your future self will thank you.

Methodology

MagnifyMoney examined data from the Survey of Consumer Finances, a triennial report issued by the Federal Reserve, to determine relative retirement savings levels for various age and income ranges from 1998 through 2016 (the date of the latest study). We only include households with savings in at least one retirement account. All figures are in 2016 dollars.

Advertiser Disclosure: The products that appear on this site may be from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all financial institutions or all products offered available in the marketplace.

Elyssa Kirkham
Elyssa Kirkham |

Elyssa Kirkham is a writer at MagnifyMoney. You can email Elyssa here

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