Social Security is a Government Safety net that can provide you with some income if you’re retired or disabled. The program is based on the idea that government is responsible for the social welfare of its citizens. Social Security is one of the sacred cow political programs. But Social Security generally is not enough to live on comfortably. Social Security is intended to provide you with a subsistence level of retirement income for the basic necessities: food, shelter and clothing, but social Security is not intended to be your sole source of income, whereas, some of the elderly are quite dependent upon Social Security.
Social Security – Background : –
When the Social Security system was created in the 1930s, its designers underestimated how long people would live in retirement. But due to improved medical care, life expectancies have risen substantially since that time and many recent retirees get back far more than they paid into the system. (you may know that part of your paycheck goes to Social Security).
The amount of social Security benefit you receive in retirement depends on your average earnings during your working years. The Social Security benefits calculations increase your older earnings to account for the lower cost of living and wages in the prior years.
Social Security – Eligibility : –
To be eligible to collect Social Security benefits, you need to have worked a minimum number of calendar quarters. If you were born after 1928, you need 40 quarters of work credits to qualify for Social Security retirement benefits. You get credits based on the income you earn during the year. You get the full four quarters credited to your account if you earn $4,880 or more ($1,220 per credit) in a year. To get 40 quarters of coverage, you basically need to work ten years. To get credits, your income must be reported and you must pay taxes on it (including Social Security Tax). If you don’t pay taxes, you may be cheating yourself out of valuable benefits.
The age at which you can start collecting full benefits has increased, and it may increase again. In the “good old days”, you could collect full Social Security payments at age 65, assuming you were eligible. This is still applicable if you were born before 1938. But if you were born after 1959, you have to wait until age 67 for full benefits. For the people born between 1938 and 1959, full benefits are payable to you at age 66.
How Much You Get From Social Security : –
The average monthly benefit Social Security pays out to retirees is about $1,328. The higher your employment earnings have been on average, the more you can expect to receive. Working spouses are eligible for either individual benefits or half of their spouse’s benefits- whichever amount is greater. To get the complete details of Social Security benefits, visit the Social Security Administration (SSA) website at www.ssa.gov or call the SSA office on phone. It is advised that you better check your earnings record, because occasional errors do arise and they usually aren’t in your favor.
It may be mentioned that Social Security is the only source of income for 21 percent of elderly, and about two out of three Social Security recipients derive atleast half of their total retirement income from their Social Security retirement check. Few working people can maintain their current lifestyles into retirement without supplementing Social Security with their personal savings & company retirement plans.
Social Security Disability Plan : –
A portion of your Social Security taxes also help fund Disability insurance for you, Survivor income insurance for your financial dependents and Medicare(the health insurance program for retirees).
Social Security pays long- term benefits only if you’re not able to perform any substantial , gainful activity for more than a year or if your disability is expected to result in death. Furthermore, Social Security Disability payments are quite low because they’re intended to provide only for basic, subsistence-level living expenses.
Social Security – Survivor’s Benefits : –
Social Security, if you are covered, can provide Survivor’s benefits to your spouse and children. However, if your surviving spouse is working and earning even a modest amount of money, he or she is going to get few, if any, Survivor’s benefits. Prior to reaching Social security “full retirement age”, your Survivor’s benefits get reduced by $1 for every $2 you earn above $14,640.
If either you or your spouse anticipates earning a low enough income to qualify for Survivor’s benefits, you may want to factor your Social Security Survivor’s benefits into how much life insurance to buy. For this purpose either visit its website www.ssa.gov or contact by phone, to estimate your benefits. For example, suppose your annual after- tax income is $25,000 and Social Security provides a Survivor’s benefits of $10,000 annually, then you should determine the amount of life insurance needed to replace $15,000 annually ($25,000- $10,000) and not $25,000.
Social Security – Your Savings/ Investment Strategy
If you’ve been working steadily , you may already have a good foundation. Money you’re saving toward retirement, may be in the Bank Saving account or Individual Retirement Account(IRA) or 401(K) or similar plan. You must invest your savings appropriately, s the amount of Social security may not be enough to give you a comfortable retired life, as you plan. In addition, make the most of the pension Plans. Pension plans are a benefit offered by some employers- mostly larger organisations and government agencies. These are known as defined- benefits plans. Pension benefits can be quite valuable in your retired life. So, try to understand these plans to take full advantage of these plans.
CONCLUSION : =
According to polls, about half of American adults under the age of 35, and more than a third of those between the ages of 35 and 49, think that Social Security benefits will not be available by the time they retire. But they may not be correct . Social security should be available when you retire, because it is a commitment of the politicians of all the political parties. Congress may make some reductions in benefits, probably for the higher income earners, at some point due to federal debt problems. So, if you think that you can never retire because you don’t hve any money saved, then also you are probably wrong and it is Self- deception. So you must save money towards your retirement and also contribute to the various retirement plans.