Social Security is a sophisticated program that, while most Americans are familiar with, many do not completely comprehend.
According to recent research by the Nationwide Retirement Institute, just 6% of Americans who are not yet receiving payments are aware of the variables that determine the maximum benefits they are eligible to receive.
Generation Z May Defer Receiving Social Security
Even people who are already receiving benefits have large knowledge gaps, according to the study.
Although it may be some time until Gen Zers reach retirement age, it is never too early to begin learning about Social Security. The more Gen Zers are aware of how it operate, the more they will be able to gain from it.
Retirement income for many people, including Mindy Yu, CIMA and director of investing at Betterment at Work, comes from Social Security. As long as they or their spouses have made enough contributions throughout the course of their careers, Gen Zers should be able to begin receiving benefits at age 62.
Those who begin collecting benefits at the age of 62, on the other hand, do not receive 100% of their benefits. Yu stated some may advise delaying benefit receipt depending on your particular personal circumstances (although there can be exceptions, such as disability, that may allow someone to take benefits earlier).
What age is the “proper” time for you to start collecting Social Security if you delay benefits? Heather Winston — director, of financial advising and planning with retirement and income solutions at Principal — said Gen Zers will receive full benefits if they retire at what Social Security deems your “full retirement age.”
“Your full retirement age is 66 or 67, or something in between, depending on what year you were born,” stated Winston.
Winston stated that generally speaking, the longer you wait to file, up to age 70, the greater your profit. Gen Zers who can postpone applying for benefits may be better positioned to maximize their income.
How To Calculate Benefits?
Social Security is a sophisticated program that, while most Americans are familiar with, many do not completely comprehend.Are you interested in learning how much payments you could receive? Gen Zers can now begin making an estimate.
Yu advises using the Social Security Administration’s Retirement Estimator. Based on your actual earnings, this calculator determines for you an expected benefit amount. To calculate future payments, ask for a replacement card, check the status of an application, and use even more specialized features, open a free “my Social Security” account through the SSA.
Yu noted that Gen Zers can learn more about Social Security in addition to using the SSA’s Retirement Estimator by speaking with real financial advisors or their retirement plan provider, as well as through any financial wellness benefits offered by their workplace.
In addition, Winston advises seeing a financial expert if you still have concerns regarding Social Security to better grasp your options for your particular scenario.
This is Social Security advice for millennials and Gen Zers. Benefits are calculated using a 35-year average of your best years of earnings, not necessarily in that order.
The average will drop if there are zeroes scattered throughout that mixture or if you take a few years off from work. Your retirement benefits will be significantly reduced for the duration of your retirement years.
Life is rarely predictable. Our ambitions are impacted by our shifting priorities. This is why Gen Z will be more successful if they adopt good financial practices, such as saving.
One of the greatest places to learn more about Social Security and retirement benefits is the SSA’s retirement benefits portal.
Gen Zers might learn more about how retirement benefits operate, how to plan for retirement, how to choose when to begin receiving benefits, and other factors that could affect your retirement benefits. Visit the SSA to learn more about how Social Security fits into your retirement strategy.