Whether you’re claiming your own (earner) benefits, or spousal benefits: If you are married, each of you may qualify for your own Social Security benefits as individual earners, or a percentage of benefits as the spouse of an earner. This makes sense: How many payments you’re likely to receive increases/decreases depending on how young/old you are when you start taking them. When you begin collecting Social Security: The longer you wait to start drawing monthly benefits, the higher each payment should be-to a point. Overall, to be eligible for Social Security retirement benefits, you need to have at least 10 years of work over your lifetime (aka, 40 “retirement credits”). How long and how much you’ve contributed: While the relationship is not 1:1, the more you’ve put in and the longer you’ve done so, the higher you can expect your monthly benefit to be once you start taking it.
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There, you can access the latest estimate on the full Social Security retirement benefits you can expect to receive once you do retire, based on your work history to date. You can start by using the SSA’s online services to find out more. You and your financial advisor must watch out for this on your own. The point is, the SSA is not responsible for always meeting your highest financial interests as an individual participant. How effectively it fulfills this mission is a conversation for another day. In short, the Social Security Administration (SSA) is tasked with managing a program to protect our collective wellbeing. Instead, you must qualify for any benefits received. There is no interest-bearing account with your name on it. In other words, your Social Security tax withholding is not an investment. Similar to an insurance policy, there is no direct, 1:1 relationship between the amount you pay into Social Security and the amount you can expect to receive in return. But every little bit helps.īeyond that, there are a lot of machinations going on behind the scenes to keep the program running. No matter how much you paid in, Social Security is unlikely to fund a luxurious retirement all by itself. Once you retire and begin drawing your Social Security benefits, you should receive some sort of dependable income stream for the rest of your lives. How does Social Security work?īasically, you and/or your spouse pay into the program during your working years through the “FICA” tax withholding on your paycheck. Of course, there are reams of fine print describing how the program works … and how it does not.
Particularly through the first two, Social Security has become an essential ingredient in most Americans’ retirement planning. Social Security disability benefits (Social Security Disability Insurance, or SSDI).“We can never insure one hundred percent of the population against one hundred percent of the hazards and vicissitudes of life, but we have tried to frame a law which will give some measure of protection to the average citizen and to his family against the loss of a job and against poverty-ridden old age.”Īt least with respect to protection against a “poverty-ridden old age,” the Social Security Administration has aimed to fulfill this protective role ever since, through: Roosevelt signed the Social Security Act into law on August 14, 1935, he commented:
Summary: The Top Social Security Questions Answered Part I: Social Security 101 1.
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