#2: How much can you expect to receive from Social Security?
According to the Social Security Administration, 53% of married couples and 74% of unmarried beneficiaries depend on Social Security for at least half of their income. A shocking 46% of unmarried beneficiaries rely on Social Security for 90% or more of their income.
To put it lightly, Social Security matters.
If you are near retirement age, you should receive regular correspondence from the Social Security Administration that outlines how much annual income you can expect to receive depending on what age you choose for retirement. If you’ve never been notified, contact your local Social Security office and ask.
To play it safe, assume that all of your Social Security benefits will be fully taxable. Currently, they are not. But given the fiscal position of the government, we should assume they soon will be. Better to err on the side of caution.
Marginal rates are always something of a moving target; we’ll use a rate of 28% for the purposes of this article. Take the income estimate from the Social Security Administration and multiply it by 0.72 (which is what is left over after the 28% tax).