What Are the Average Retirement Benefits?

Retirement benefits are two-sided: Private and government or social. Most social benefits depend on what a retiree is entitled to under his own private plans, such as savings, investments and pensions. Most American workers who retire will, at some point, be entitled to social services, mainly Social Security; some will also receive Veterans Administration benefits if they are eligible retired members and/or families of the U.S. Armed Forces.

Private Pension Plans

According to Investopedia, a pension plan is a mostly tax exempt plan where employers make contributions toward a pool of funds set aside for an employee's future benefit. The pool is then invested on the employee's behalf, allowing the employee to receive benefits upon retirement. These pension plans include, but are not limited to, employer-matched 401(k)s, IRAs, SEPs and the government-backed Pension Benefit Guaranty Corporation (PBGC), which backs corporations. Benefits, of course, depend on what is put into them, how much interest is drawn over the long term and how much employer-matching increased those benefits.

Government Plans

The major government-backed plan, besides the privatized PBGC, is, of course, Social Security. Social Security pays out retirement benefits according to how long a person has worked, how old they are when they retire, whether they are disabled, how long they have contributed to the Social Security system and how much, as well as other criteria. Retirees can receive cash, medical, food, health care and prescription assistance as well as available assistance for those who have lost the primary breadwinner in their family due to death or disability regardless of age stipulations.

Social Security

There is no real way to determine average dollar-amount retirement benefits on Social Security for individuals. It depends on various personal criteria not suited for making guesses. The available programs, however, include monthly Social Security retirement pay, Disability, SSI (supplemental security insurance for those with low incomes), Medicare, some Veteran’s benefits and Spousal and/or Widow workers’ benefits. If you would like to have some idea of how this would work in your case, see the Online Retirement Estimator below.

How Basic Social Security Is Calculated

For the average individual, the lowest age they can retire to receive Social Security is age 62. Those born in 1929 and earlier were able to retire at age 65. Those born after 1929 are divided into groups by the year they were born; a retirement age is determined based on the year of birth. For example, those born in 1959 do not have to wait until age 70 to retire; they can retire at 67 and 10 months and be eligible for full, rather than partial, benefits. If they wait until age 68, however, they will receive 100-percent of what they are entitled to and a “credit” (or increase) based on how long they waited. So if they wait until age 70, they will receive additional money in the form of a monthly “credit” for waiting an additional two years and two months. If they wait until age 68, the “credit” is about 3 percent for the extra two months. Monthly benefits are as low as $250 a month for some persons and as high as a couple thousand for others, depending on financial circumstances and monies paid in while working.

About ERISA Law

ERISA is the Employee Retirement Income Security Act of 1974. It is a federal law that sets standards of protection for private sector retirement plans for individuals. The Act oversees such things as participation, vesting, benefit accrual, funding; provides fiduciary responsibilities for those who manage and control plan assets; and requires plans to establish a claims and appeals process, amongst other benefits. Certain benefits under ERISA law are guaranteed through the federally chartered corporation mentioned above, the "PBGC."