All U.S. workers pay into Social Security. Most people expect to use Social Security retirement benefits when they retire and nearly 65 million Americans currently receive benefits. But there is more to social security – here are the basics:
Most Americans use Social Security for a retirement income foundation
Every taxpaying American contributes to Social Security each year. At age 62, they can choose to start receiving their retirement benefit or wait until 67 to receive their full retirement benefit. These benefits are not means-tested, meaning that anyone who has contributed can receive the benefits they have earned, regardless of other sources of retirement income.
Social Security benefits increase with the cost of living
Social Security benefits rise with the cost of living. Social Security Administration evaluates the number of working years and yearly earnings to calculate individual benefits. These earnings adjust for inflation and will continue to adjust each year to keep up with inflation. This ensures that people avoid poverty as they age so that retirees can maintain a quality standard of living. Benefits are typically only substantial enough to cover necessities. Most people can expect their monthly benefit to be about 25-40% of what their monthly income was while working.
Most retirees rely on Social Security for most of their income
Nearly half of seniors rely on Social Security to provide at least 50% of their income, while about a quarter of seniors rely on Social Security to pay about 90% of their income. Relying solely on Social Security for income means that it is difficult to cover living expenses. When planning for your retirement, it is essential to create other sources of income.
Social Security is more than a retirement safety net
Social Security offers other income programs, including disability protection, life insurance, and survivor benefits. Survivor benefits provided spouses with the option of receiving the deceased spouse’s benefit after passing. For example, if a husband receives a monthly benefit of $1,800, and a wife receives a benefit of $1,400. If the husband dies first, the wife can choose to continue to collect $1,400 or collect her husband’s $1,800 benefit instead. Additionally, if a Social Security recipient dies and leaves a child under the age of 18 behind, the child is eligible to receive the deceased’s retirement benefit until age 18, if the child is a full-time student. Disability benefits are another main benefit of Social Security. If a person is unable to work due to a physical or mental condition, they may be able to receive disability benefits.
Social Security has paid benefits retirees for almost 90 years. However, these payments are quite modest and won’t support your desired retirement lifestyle. If you have questions about Social Security and how it fits into your retirement plan, we can help. To schedule your no-obligation meeting, just click on the link below or call us today at 704-790-2583 (BLUE).
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