Mark Ahlers

Mar 09 2016

Financial Planning: Social Security and the Income Gap—Part 1 of 3

Financial Planning for Retirement.
This is the first in a 3-part series on financial planning and social security.

When the Social Security retirement income system was created in the 1930s, it was designed to provide a partial retirement income supplement. Today, the average Social Security retirement benefit is approximately $1,250 per month, or $15,000 per year. The amount of annual living expenses not covered by Social Security or income sources such as a pension or rental income is often referred to as your “income gap.”

Full, or unreduced, Social Security benefits are based upon your birth year:

Year of Birth            Full (normal) Retirement Age

1937 or earlier           age 65
1938                             age 65 and 2 months
1939                             age 65 and 4 months
1940                             age 65 and 6 months
1941                             age 65 and 8 months
1942                             age 65 and 10 months
1943-1954                  age 66
1955                             age 66 and 2 months
1956                             age 66 and 4 months
1957                             age 66 and 6 months
1958                             age 66 and 8 months
1959                             age 66 and 10 months
1960                             and later age 67

If you start your retirement benefits at age 62, your monthly benefit amount may be reduced by as much as 30%. Thanks to what the Social Security Administration calls “delayed retirement credits,” benefits increase 8% each year you delay receiving Social Security—up to age 70. So waiting until you reach age 70 means as much as a third more income for life.

Your personal situation can help you decide when to take benefits. Consider the following:

  • Your health. If your health is poor, you may want to take benefits early.
  • Are you still working? Your benefits will be temporarily reduced once your income exceeds a certain amount if you begin receiving benefits prior to your normal retirement age.
  • Is your family long-lived? You may need the extra income later on, so waiting may be the best choice.
  • The break-even point. If you are considering taking benefits earlier or later than your normal retirement age, you can figure your “break-even” point—the age after which your total lifetime benefits would be either less or more than they would have been if you had taken them at normal retirement age.

For more information about Social Security or to obtain a benefit estimate and earnings statement, go to We welcome the opportunity to meet with you for a complimentary review of your goals to make sure you are on the best road for your retirement journey. We invite you to schedule a meeting with one of our experienced financial planning experts by calling 1-800-899-8858 or visiting us online at

Please visit our blog,, next Wednesday for part 2 of our 3 part series, “Financial Planning: How Much Can I Spend?” You’ll learn how long your retirement assets will last.

View the complete 3—Part Financial Planning for Retirement Series:

Investment products are not a deposit, not FDIC insured, not insured by any federal government agency, carry no bank guarantee, and may go down in value.


Mark Ahlers

About Mark Ahlers

Mark Ahlers is Vice President, Trust Officer at Hills Bank’s Marion location on 7th Ave. Mark’s area of concentration and expertise includes administering portfolios for non-profit organizations (foundations and endowments) and personal trust, as well as financial and retirement planning for individuals. Mark also administers employer-sponsored retirement plans. Mark is a graduate of Briar Cliff University in Sioux City, Iowa. Prior to joining the bank in 2006, Mark worked in the Trust and Wealth Management Division of a Midwest-based bank. Mark can be reached at

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