A Closer Look at Your Social Security
, on August 18, 2008
On Friday, I received my Social Security Statement and looked closely at it for the first time. Although, I have been getting these statements for years, I have never paid too much attention to them until now. The reason? My mom is turning 65 this year, and I need to figure out her options.
Some Facts About Social Security
Surprisingly, the Social Security Statement contains a lot of good information. I included a few highlights here for you.
- Social Security is for everyone, not just retirees. Social Security can provide benefits if you become disabled, or help support your family if you died.
- Social Security is not intended to be your only source of retirement income. Social Security is meant to supplement your other sources of retirement income. You will need other savings, investments, pensions, and retirement accounts to make sure you have enough money to live comfortably when you retire. Here’s how to calculate your retirement needs.
- Social Security is a cotract between generations. This means working Americans who pay Social Security taxes are funding Social Security payment for retired and disabled Americans, or their dependents. So, I will be funding mom and dad’s retirement one way or another.
- Social Security is in serious financial trouble. Due to our demographic, the Social Security Administration (SSA) will be paying more in benefits than they’ll collect in taxes by 2017. Without changes, the Social Security Trust Fund will be exhausted by 2041, and the administration will only be able to pay 78 cents for every dollar of benefits. Great, just when I am supposed to get paid.
- Social Security benefit is based on your lifetime earnings. Your Social Security benefit is calculated based on your average earnings over your working lifetime, not how much you have paid in taxes. If you don’t report all of your income, don’t complain about low benefits.
- Social Security benefit is available even if you continue to work. You can work and still get retirement or survivors benefits. However, the amount of benefit will be reduced if you haven’t reached your full retirement age.
What Social Security Means To Me
There’s a lot more information in the statement, but here are some of the key takeaways for me:
- I am turning 35 this year, so I’ll the full retirement age by 2040 (assuming the Social Security Administration doesn’t increase the age). This is a year before the Social Security Trust Fund will be exhausted, so I cannot count on Social Security to supplement my retirement.
- For people my age and younger, it’s even more important for us to save and invest wisely. The SSA recommends www.mymoney.gov, a federal government website dedicated to teaching Americans the basics of financial management.
What about mom?
- Her full retirement age is 66, so she still has a year before she needs to act.
- She needs to sign up for Medicare three months before reaching age 65 — so that means she has to apply now. I’ll be checking out www.socialsecurity.gov/applyforbenefits and www.medicare.govtoday.
I found the information in the statement really useful, so I hope this short article is helpful as well. Be sure to read your Social Security Statement carefully the next time you receive one.
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About the AuthorPinyo
is the owner of Moolanomy Personal Finance
and an entrepreneur with over 20 years of business experience. He has a strong appreciation for business management, investing, and wealth building. He has written for many online publications, including American Express and U.S. News.
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