LIFETIME INCOME AND NET WORTH
You can access your Social Security statement, including your lifetime earnings history, by signing up at socialsecurity.gov/myaccount. Add up your annual earnings, plus any other income you’ve received such as gifts, inheritances, investment income, pensions, under-the-table earnings or government benefits. (Estimates are fine.)
Now, calculate your net worth by subtracting what you owe (your debts, including loans, credit card debts and mortgages) from what you own (your assets, such as your home, retirement accounts, investments and savings). Compare your net worth to your lifetime income to see what you’ve done with the money that came into your hands.
There’s no objective scoring system. Like the hourly wage figure, this exercise is meant to make you more aware of what you do with your money. If you think you should have more to show for the money you’ve received, consider trying to save more of your income.
FULL RETIREMENT AGE AND EXPECTED SOCIAL SECURITY BENEFIT
Your full retirement age is the age at which you are entitled to 100% of the Social Security benefits you’ve earned. If you apply for benefits before that age, your checks will be permanently reduced. If you delay your application until after full retirement age, you can qualify for delayed retirement credits that boost your benefit by 8% each year until 70 years old, when benefits max out.
The full retirement age has gradually been increasing. For those born 1943 through 1954, your full retirement age was 66. After that, full retirement age increases by two months each year: it’s 66 and two months for people born in 1955; 66 and four months for people born in 1956, and so on. The full retirement age is 67 for people born in 1960 and later.
To better plan for retirement, you should have some idea of how much you can expect from Social Security. You’ll find estimated benefits in your Social Security statement. (While Social Security is facing a shortfall, the system will still collect enough taxes to pay at least 75% of promised benefits even if Congress doesn’t act to shore up its finances.)
RETIREMENT SAVINGS RATE
How much of your income are you saving for retirement? Is your savings plan likely to let you retire when you want? (An online retirement calculator can give you a ballpark figure.) Anything you can do to close this gap may help you have a more comfortable retirement.
CREDIT SCORES AND DEBT-TO-INCOME RATIO
You’ll have a better idea of how lenders view your credit applications if you know your credit scores and debt-to-income ratio. (Good credit also can save you money in myriad ways, from interest payments to insurance premiums.) Monitoring at least one of your scores can allow you to see your progress in building credit and alert you to problems, such as identity theft.
To calculate your debt-to-income ratio, combine your monthly debt payments with your current rent or mortgage payment and compare that with your monthly income. A debt-to-income ratio of 36% or less is considered good by most lenders. A ratio over 50% could make it difficult to get approved for new loans. If your ratio is in between those two points, paying off some of your debt could help you qualify for the loans you want (and help you sleep easier at night).