The Hard Times Guide to Retirement Security: Practical Strategies for Money, Work, and Living

Chapter 3. Getting the Most from Social Security

Considering all the attention the financial press pays to the stock market and investing for retirement, you'd think it's the most important source of retirement security. It's not. For most people, stock portfolios provide a relatively small portion of overall income in retirement; the average American household approaches retirement with about $60,000 in retirement portfolio savings,^[21] hardly enough to play a central role in retirement-security planning. And traditional pension plans are a disappearing breed. That means most Americans will rely on Social Security as their most important source of support in retirement—39 percent of total income on average.^[22] It's a terribly important resource—and one that most of us don't understand very well. Most Americans don't know when they become eligible for Social Security, how much it pays, or how to maximize benefits.

Against the backdrop of the economic crash, it's hard to overstate the importance of Social Security as a key component of retirement security. You've been paying taxes into the system your entire working life, and payouts represent a sort of public annuity-style benefit that's there for you so long as you live. It's one of the few retirement benefits that automatically adjusts payments for inflation. And your benefits can be passed along to your spouse after you die. The program is absolutely critical for older Americans, keeping 35 percent of the elderly out of poverty. ...