Retirement Income and Social Security
Budgeting for retirement can be difficult whether you're at retirement age or still early in your career. It's difficult to see where you'll be in your career many years in the future, how much your pension will be and what kind of lifestyle you'll live. There are, however, two things you can count on: your own savings and Social Security retirement benefits.
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Social Security Retirement Definition
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Social Security Retirement benefits are available to anyone who has worked long enough while paying Social Security taxes. For most people of retirement age, you must have worked at least ten years to qualify. As of 2010, the earliest you can collect benefits is age 62, though many people wait until full retirement age (an age specific to your birth date) in order to avoid spreading benefits too thin.
Misconceptions
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While some may expect that Social Security retirement will be plenty to live on, this isn't usually the case. The average benefit paid to retirees in August 2010 was $1,171 a month, and while you may receive more depending on your salary during working years, your total retirement income must be at least 70 percent of your working salary to survive comfortably in retirement, according to CNN Money.
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Social Security Benefit Amount
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In order to determine how much you'll receive from Social Security, you can look at your Social Security statement for an estimate of your retirement benefit, though this may be inaccurate if you've retired early.
Methods of Investing
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Since Social Security usually won't be enough to sustain living expenses in retirement, an investment account is your best option for having the extra money you'll need. A 401(k), IRA or ROTH-IRA are the safest methods of investing. Each provides great potential for growth over time.
Expert Insight
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CNN Money recommends that those who have many years before retirement put 70 percent of savings into stocks and just 30 percent into bonds, since stocks prove to grow more over long periods of time. Additionally, contribute as much as you can into a 401(k), especially if your employer will match your investment. This is the easiest way to save, since the money will usually be deducted from your paycheck before you see it---and the earlier you start, the more your money will compound or grow.
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