From Retirement Now Newsletter May 27th 2021

I was recently reading about how Social Security is redesigning their statements.

If you have an online account with them you may be able to see the new format on your latest statement.

Then again, you may not since they are doing a “soft rollout” right now for a small percentage of online users who have not begun drawing benefits yet.

Anyway, the screenshots that I’ve seen look very nice and seem to me to provide better information for people on helping them determine when to draw Social Security.

How so?

The new statement shows what your estimated benefit would be for all ages, from 62 up to 70, in a very snazzy bar chart.

Currently, the old statement only shows what it would be for an individual at age 62, 67, and 70. Then you have to manually calculate an estimate if you want to begin drawing in a different year. In fact, I’ve had clients ask me to figure the math for the different ages.

These new statements make it a lot easier.

One thing to keep in mind…

… The new statements continue to use projections of what your benefit will be if you continue working. And since it’s common for our later years of salary to be higher than our first years in the job market, those higher earning years are assumed/projected to materialize and replace those lower earning years. Social Security will take your highest 35 years of work earnings to determine your benefit.

If you begin drawing benefits at 62, and Social Security was assuming you’d have higher average earnings, you may be surprised when the benefit could actually be lower than what the statement said.

Remember, the Social Security statement is only showing an estimate and that estimate is based on assuming you keep working until full retirement age and keep earning the approximate salary you earn now.

When that reality changes (due to early retirement) it changes the actual Social Security benefit… in the downward direction.

Anyway, that’s something to keep in mind when planning your retirement. There’s nothing worse than expecting a specific level of retirement income, only to be surprised at the last minute that it’s going to be lower.

Which could throw off your whole plan, force you to work longer, save more, or take the extra risk of withdrawing higher amounts from your portfolio to make up the difference.

Conclusion: Social Security definitely plays a vital role in most people’s retirement. And there are other important issues as well, like how to invest your portfolio, what levels of withdraws to take from it without making it fully deplete, there are tax issues that need to be planned for, and more.

And if you are concerned about your retirement and making sure you have addressed these issues so you don’t have to worry about it anymore and would like some guidance, click here to book a 20 minute phone chat with me where you can get some of your questions answered and I’ll help point you in the right direction.


Chris Hammond