Planning ahead for Social Security and retirement

Mark Watanabe of San Francisco is enjoying his second year of his retirement. Retiring was not something he gave a lot of thought.

"I was kind of like a person who was just going to leave things to happenstance and hope for the best," he said.

The California Society of CPAs estimates that Social Security is the primary source of income for 40 percent of all retirees. Yet many of us do not include Social Security in our retirement planning.

"Frankly, I didn't know how much they pay per month, but I would not expect it to be my primary income during my retirement," said Ifeoma Haunwa of San Francisco.

"It's definitely in the back of my mind," said Emily Morales of San Francisco. "I'm 25, so it's nothing I think of daily."

Jim McHale is a CPA in San Francisco. He says the average retiree gets $1,153 per month from Social Security.

"The average apartment in San Francisco I think is at least $1,300 a month, so right now we're seeing that when people retire, the average employee retiring is going to receive a benefit that wouldn't even cover their monthly rent," he said.

McHale says whether you are 25 or 50, you should be thinking now about how to add to your Social Security income. The earlier you start saving, the less you need to worry later.

Watanabe retired when he was 64, two years before his official federal retirement age. The early retirement means Social Security is only giving him 85 percent of the benefits he would have received if he had waited just two years. But he could turn those benefits into an interest-free loan by paying back Social Security in full and then withdrawing his full benefits later.

"You pay them back and then in a couple of years, you can file again," said McHale.

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