Presently, your Social Security income benefits grow five percent a year for each year after 65 that you delay retiring, up to 70. By 2008, this will increase to eight percent for each year. Higher taxes on Social Security benefits. Although you presently pay taxes on 85 percent of your Social Security income if your income reaches a certain threshold, the percentage taxable is expected to increase. Social Security taxes, which are presently 7.65 percent, are also likely to increase.
Pension plans are major sources of retirement income.
Not all pension plans are created equal, however. A less generous plan averages your salary over your entire career. Defined contribution plans allow the employee to make tax-deductible contributions to his or her plan, with the employer matching up to the full amount of the employee's contribution. For instance, if you contribute six percent of your gross income, the company might contribute three percent of your salary, for a 50 percent matching contribution. Few investments offer a return of 50 percent upfront.