Social Security: Why it's important to your retirement

USAA Life Insurance Company and USAA Life Insurance Company of New York

Social Security is the largest source of income for older retirees. According to the Social Security Administration's "Income of the Aged Chartbook Opens in New Window,"‍ ‍ ^{See note 1} these benefits make up 90% or more of total retirement income for about 20% of married couples and over 40% of unmarried people.

Especially for lower and middle-income retirees who depend on it the most, Social Security is a critical component of your retirement toolkit. That's because Social Security benefit payments are:

• Paid for the rest of the retiree's life, so there's no risk of outliving your money.

• Not subject to stock market volatility, so you don't have to worry about stock market returns.

• Periodically increased by the Consumer Price Index, which makes inflation less of a risk.

• Generally exempt from federal income tax — up to certain limits.

• Paid automatically and often electronically.

Deciding whether to claim Social Security benefits at or before full retirement age is one of the biggest financial decisions most people make as they transition to their nonworking years. More than a third of men and women continue to claim benefits early at age 62. But the decision to claim benefits at 62 could permanently reduce most Americans' largest and most reliable source of stable retirement income. How important is Social Security to your retirement income plan?

First, look at how much of your retirement lifestyle will be guaranteed by non-Social Security benefits, such as pensions and annuities. Second, understand some of the risks you may face in retirement and how Social Security can help manage them. Lastly, consider how the decision of when to claim Social Security benefits affects your family's retirement plan.

For more information, visit the Social Security website.‍ ‍ ^{See note 1} For retirement planning, visit the USAA retirement page.