Make Social Security part of your retirement plan
Social Security can help give you financial success in retirement if you understand your options and choose wisely.
POINTS TO KNOW
- Social Security has features for retirees that other retirement savings plans don't have.
- When creating your retirement plan, be sure to include your Social Security benefits as an income source.
- It's important to have a retirement budget: Itemize your income sources and expected expenses.
Constructing your retirement plan
Planning today can make a big difference in your retirement lifestyle tomorrow.
Once you leave the workforce, the years that follow can be all that you want them to be—if you pave the way with a comprehensive financial plan that includes your Social Security income.
Your plan should be based on what you know today and flexible enough to adapt to any changes—like unforeseen personal circumstances or developments that come out of Washington.
Social Security can be a valuable tool to help bridge any gap you may have between your expected sources of income and your expenses.


Source: Employee Benefit Research Institute's 2018 Retirement Confidence Survey.
If you already have a retirement plan that takes your Social Security benefits into account, that's great! You're one step closer to ensuring your assets last throughout your lifetime.
If you need help with retirement planning, we can get you started.
Get your Social Security estimates
The Social Security Administration (SSA) website provides estimates for how much you'll collect if you start receiving benefits at age 62, your full retirement age (FRA) (between 66 and 67), and age 70.
4 tips to help you put your plan together
Evaluate your income & expenses
For many individuals and couples, retirement can span 25 to 30 years, so it's natural to want to ensure your income will last.
That's why it's important to estimate your budget in retirement.
- First, list your Social Security benefits as income along with any other sources you may have, such as an IRA, an annuity, an employer plan, or pensions.
- Then, list all your expected expenses in retirement.
- Finally, see where you stand with our retirement income calculator. You'll be able to compare what you may have with what you think you'll need.
How Americans spend their money
Source: Social Security Administration, Annual Statistical Supplement, 2018; Jodi Thornton-O'Connell,
Guess the Amount Americans Spend on These 5 Common Things, May 25, 2017.
Aim to max out your benefits
You'll want to make sure your Social Security payments are as high as possible by using thoughtful claiming strategies.
- Weigh the advantages of waiting as long as you can to collect.
- Find out what options are available to married couples, if applicable.
- See what other benefits you may qualify for.
When figuring out your best Social Security claiming strategy, your marital status is a good place to start. Select your status to learn more about your Social Security options.
Be flexible
Too often, people think they only have 3 choices when it comes to taking Social Security:
- Do I take the money as soon as I can when I'm 62 and permanently reduce my benefit by as much as 30%?
- Do I wait until full retirement age (FRA)—66 to 67—depending on my birth date, and get 100% of my benefit?
- Do I hold off until I'm 70—the latest possible claiming date—and increase my benefits by 8% each year after FRA?
Depending on your needs, you can start collecting Social Security anytime between ages 62 and 70. The key is to remain flexible so that you can respond to what's happening in your life.

See how it works: It pays to wait
Consider working longer
It's becoming more and more common for those who've reached retirement age to continue to work. Some need the money while others simply want to keep busy or enjoy the social interaction.
If you haven't saved as much as you'd hoped, working longer can help you fill the financial gaps in your retirement plan.
You can continue to contribute to employer plans and make catch-up contributions that will grow tax-deferred. You may even be able to postpone drawing from your savings.
And remember, if you delay taking Social Security, your benefits can continue to grow.
If you decide to work either full- or part-time, you should know how collecting a paycheck will affect your Social Security benefits.
Percentage of Social Security benefits you'll receive by age
Birth year: 1943–1954
62 (earliest possible)
75.0%
63
80.0%
64
86.7%
65
93.3%
66 (full retirement age)
100.0%
67
108.0%
68
116.0%
69
124.0%
70 (latest possible)
132.0%
Birth year: 1955
62 (earliest possible)
74.2%
63
79.2%
64
85.6%
65
92.2%
66
98.9%
66 and 2 months (full retirement age)
100.0%
67
106.7%
68
114.7%
69
122.7%
70 (latest possible)
130.7%
Birth year: 1956
62 (earliest possible)
73.3%
63
78.3%
64
84.4%
65
91.1%
66
97.8%
66 and 4 months (full retirement age)
100.0%
67
105.3%
68
113.3%
69
121.3%
70 (latest possible)
129.3%
Birth year: 1957
62 (earliest possible)
72.5%
63
77.5%
64
83.3%
65
90.0%
66
96.7%
66 and 6 months (full retirement age)
100.0%
67
104.0%
68
112.0%
69
120.0%
70 (latest possible)
128.0%
Birth year: 1958
62 (earliest possible)
71.7%
63
76.7%
64
82.2%
65
88.9%
66
95.6%
66 and 8 months (full retirement age)
100.0%
67
102.7%
68
110.7%
69
118.7%
70 (latest possible)
126.7%
Birth year: 1959
62 (earliest possible)
70.8%
63
75.8%
64
81.1%
65
87.8%
66
94.4%
66 and 10 months (full retirement age)
100.0%
67
101.3%
68
109.3%
69
117.3%
70 (latest possible)
125.3%
Birth year: 1960 and after
62 (earliest possible)
70%
63
75.0%
64
80.0%
65
86.7%
66
93.3%
67 (full retirement age)
100.0%
68
108.0%
69
116.0%
70 (latest possible)
124.0%
Why choose Vanguard for your retirement needs
Our clients share a commitment to a long-term, disciplined way of investing that's helped millions of people retire with confidence.
But the journey doesn't end once you're retired. We can help you make your hard-earned money last throughout your retirement years.
A Vanguard advisor can help

When to collect Social Security is an obvious retirement decision you have to make, but there are other questions you may not have thought of. Which accounts should you spend from first? Is a Roth conversion appropriate for any of your accounts?
While representatives from the Social Security Administration (SSA) are trained to help get you through the system, they can't create a financial plan or tell you how to maximize your benefits.
That's where Vanguard Personal Advisor Services® can help. You'll also get a custom financial plan, ongoing portfolio management, investment coaching, and real-time goal tracking—all at a low cost.
Your Social Security guide
Factors affecting payments
Your retirement
Your best Social Security strategy
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REFERENCE CONTENT
Social Security's exclusive benefits
Think of Social Security as a unique planning tool with features that other retirement plans like IRAs and 401(k)s don't have.
Guaranteed income
Similar to an income annuity, Social Security benefits are guaranteed and provide a solid foundation for your ability to meet your expenses.
Inflation protection
Unlike other retirement income sources, Social Security benefits are adjusted to keep pace with inflation. These cost-of-living increases, which started in 1975 with 8%, have ranged from no increase to 14.3%.
A hedge against longevity
Social Security is one benefit you can't outlive. It's like having an insurance policy against running out of money.
Protection against the markets
The U.S. government backs Social Security, so your benefits are immune from the markets' ups and downs.
Tax advantages
Up to 85% of Social Security benefits—never 100%—may be taxed, making these benefits tax-efficient compared with other retirement income.
Risk-free increases
If you can delay taking benefits past your full retirement age (FRA), you'll get an 8% increase for every year you wait past your FRA. That guaranteed percentage number is hard to match in today's economic environment.
Full retirement age (FRA)
The age at which you're eligible for your full monthly benefits, also known as the primary insurance amount (PIA). The Social Security Administration sometimes refers to full retirement age as "normal retirement age" (NRA).
Individual retirement account (IRA)
A type of account created by the IRS that offers tax benefits when you use it to save for retirement.
Annuity
A financial product typically used by investors to save tax-deferred for retirement or to generate regular income payments in retirement.
Employer retirement plan
A retirement plan offered by an employer for its employees. Defined benefit plans (also known as pension plans) promise monthly benefits at retirement. Defined contribution plans (401(k)s and Roth 401(k)s) feature regular contributions by the employer and the employee.
Pension plan
An arrangement under which an employer—and sometimes the employee—makes payments toward retirement, disability, or death benefits for employees who meet certain criteria. Types of pension plans include defined benefit plans, defined contribution plans, employee stock ownership plans, money purchase plans, profit-sharing plans, stock bonus plans, thrift plans, and target benefit plans.
Full retirement age (FRA)
The age at which you're eligible for your full monthly benefits, also known as the primary insurance amount (PIA). The Social Security Administration sometimes refers to full retirement age as "normal retirement age" (NRA).
Tax deferral
Delaying the payment of income taxes on earnings generated in an investment account. For example, if you have a traditional IRA, you don't pay income taxes on the interest, dividends, or capital gains accumulating in the account until you begin making withdrawals.
Should you consider a break-even analysis?
The question many people wrestle with in trying to decide when to take Social Security is: When will I come out ahead?
The decision as to the "right" time to claim Social Security has often been based on a break-even analysis of a retiree's expected benefits, if claimed at different ages, versus his or her life expectancy. The break-even point is the age at which the benefit amounts intersect.
In other words, will the money you'll get by claiming early and getting smaller checks for potentially a longer period of time be more than what you'll get by waiting and getting larger checks for potentially a shorter period of time?
Case study
John is 61 and his full retirement age (FRA) is 66 and 6 months. He gets the following monthly estimates of his benefits by logging on to his account on ssa.gov:
- At age 62: $1,812.50.
- At age 66½: $2,500.
- At age 70: $3,200.
Here are his break-even points for claiming at various ages.
- Between ages 76 and 77 if John claims at age 62 versus FRA.
- Between ages 80 and 81 if John claims at age 62 versus age 70.
- Between ages 84 and 85 if John claims at FRA versus age 70.

The limitations of break-even analysis
Simply looking at a lifetime lump sum ignores 2 key features of Social Security:
- Once you start receiving it, it's paid for the rest of your life, no matter how long you live.
- It's adjusted upward for inflation.
A big concern for most retirees is the risk of outliving their savings. In the case of our hypothetical 61-year-old, Social Security life expectancy tables show his median life expectancy is about equal to the break-even age if he claims Social Security at FRA versus 70.
So if you can afford to do so, deferring Social Security for a few years (even past your FRA to the maximum benefit at age 70) increases your lifetime monthly benefit. And that can help you bridge any income gap you may have in meeting your expenses.
Catch-up contribution
An additional amount that taxpayers age 50 or older can invest for retirement on a tax-deferred basis.
Roth IRA conversion
The transfer of assets from a traditional IRA into a Roth IRA. Because Roth IRAs are funded with after-tax dollars, the assets being converted are subject to income tax.
It pays to wait
Anna, age 62, is deciding when she should file for Social Security benefits. She's eligible for a monthly benefit of $1,200 now. If she waits until her full retirement age, 66, she'll receive $1,600 a month. And if she delays until she's 70, she'll receive $2,112 a month.

Source: Social Security Administration. Hypothetical example for illustration purposes.
How Americans spend their money
This chart shows the top 5 monthly expenses of the typical American household: $682 for mortgage or rent; $302 for groceries; $166 for car expenses; $61 for household necessities; and $50 for clothing.
Find your FRA
1943-54
66
1955
66 and 2 months
1956
66 and 4 months
1957
66 and 6 months
1958
66 and 8 months
1959
66 and 10 months
1960+
67