At age 60, most Americans are closer than they think to making one of the most consequential financial decisions of their retirement years.
Social Security retirement benefits are not available quite yet at 60, but the choices made in the coming years will shape retirement income for decades.
Understanding the full landscape of Social Security options is essential, because retirement benefits are just one of several types of payments available to eligible Americans.
Survivor benefits, for example, can begin as early as age 60 for those whose spouse has died, including divorced spouses whose marriage lasted at least a decade.
A divorced person can even collect survivor benefits on a former spouse’s work history after remarrying, provided the remarriage occurred at age 60 or later.
Social Security Disability Insurance is another option worth considering for those who cannot continue working due to a qualifying disabling condition before reaching full retirement age.
Claiming SSDI instead of taking early retirement benefits at 62 can help workers avoid the permanent reduction that comes with claiming retirement benefits ahead of full retirement age.
Spousal benefits represent yet another avenue, potentially paying up to half of a spouse’s primary insurance amount for those who wait until their own full retirement age to claim.
Beyond knowing which benefits exist, understanding how Social Security calculates the actual payment amount is critical for anyone approaching retirement age.
The Social Security Administration bases retirement benefits on a worker’s average wages across their 35 highest-earning years, adjusted for inflation, which makes the earnings record a central factor in the final benefit calculation.
Workers with fewer than 35 years of solid earnings may benefit from continuing to work, allowing higher recent wages to replace lower-earning years in the calculation.
It is also vital to verify the accuracy of your earnings record through your mySocialSecurity account, since errors can result in a lower benefit that should never have occurred.
Correcting any mistakes on the earnings record requires contacting Social Security directly, and doing so well before claiming is strongly advisable.
Perhaps the most sobering reality for those approaching retirement is that Social Security benefits typically replace only around 40% of preretirement income for average earners.
Higher earners can expect even less income replacement, because the benefit formula is intentionally progressive, providing proportionally more to lower-income workers than to those who earned more throughout their careers.
That reality makes building substantial savings in retirement accounts an essential complement to whatever Social Security benefits a person will eventually collect.
Making well-informed decisions about when and how to claim Social Security can make a meaningful difference in total lifetime retirement income.
