Understanding Social Security

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Understanding Social Security and how to Optimize its Benefits

Social Security is a vital program that provides financial support to millions of Americans. It’s designed to help those who have reached retirement age, become disabled, or lost a spouse. In this article, we’ll explore the basics of Social Security, how it works, and what you need to know to optimize your benefits.

What is Social Security?

Social Security is a federal program that provides financial support to eligible individuals. It was established in 1935 as part of the New Deal and has since become one of the most important social programs in the country. The Social Security Administration (SSA) is responsible for managing the program and ensuring that eligible individuals receive their benefits.

How Does Social Security Work?

Social Security is funded through payroll taxes. When you work, you pay a portion of your earnings into the program. The amount you pay is based on your income, with a maximum limit set each year. In 2021, the maximum taxable income for Social Security is $142,800.

When you reach retirement age, you can begin to receive benefits from Social Security. The age at which you can begin to receive benefits depends on your year of birth. For those born in 1960 or later, the full retirement age is 67. You can choose to begin receiving benefits as early as age 62, but your benefits will be reduced if you do so.

In addition to retirement benefits, Social Security also provides disability benefits to those who are unable to work due to a disability. To be eligible for disability benefits, you must have a medical condition that is expected to last for at least 12 months or result in death.

What You Need to Know to Optimize Your Social Security Benefits

To optimize your Social Security benefits, it’s important to understand how the program works and what factors can affect your benefits. Here are some key things to keep in mind:

  1. Know Your Full Retirement Age: Your full retirement age (FRA) is the age at which you can receive your full Social Security benefits. If you choose to begin receiving benefits before your FRA, your benefits will be reduced. If you wait until after your FRA to begin receiving benefits, your benefits will be increased.
  2. Consider Delaying Benefits: If you can afford to wait, delaying your Social Security benefits can result in a higher monthly benefit amount. For each year you delay receiving benefits past your FRA, your benefits will increase by approximately 8%.
  3. Work Longer: The amount of Social Security benefits you receive is based on your highest 35 years of earnings. If you have not worked for at least 35 years, your benefits will be reduced. Continuing to work and earning a higher income can help increase your benefits.
  4. Understand Spousal Benefits: If you are married, you may be eligible for spousal benefits. This allows you to receive benefits based on your spouse’s earnings record. If your own benefits are lower than your spousal benefits, you can choose to receive the higher amount.
  5. Be Aware of Taxes: Social Security benefits may be subject to federal income tax if your income is above a certain level. Understanding how your benefits may be taxed can help you plan for retirement.

Social Security is a valuable program that provides financial support to eligible individuals. Understanding how the program works and what factors can affect your benefits is essential to optimizing your benefits. By knowing your full retirement age, considering delaying benefits, working longer, understanding spousal benefits, and being aware of taxes, you can make the most of your Social Security benefits and enjoy a secure retirement.

Some employees worry that their Social Security benefits will be lowered in a “unrealistically severe” way. But that doesn’t mean not to claim early

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Surely you’ve heard that Social Security relies on dwindling money to pay out benefits.

According to a study from Boston College’s Center for Retirement Research, media headlines have a significant impact on your perception of the situation.

According to the Center for Retirement Research, this can affect how early you intend to claim your retirement benefits.

Trustees of Social Security provide an annual report on the state of the program’s finances. Negative headlines have become commonplace.

For instance, consider this year. As the Covid-19 pandemic raged on for months, the 2021 trustees’ report was released in August, months later than usual.

Just one year earlier than previously predicted, the pandemic pushed the depletion timetable forward.

There are still only 13 years left in the combined trust funds used to provide retirement, survivor, and disability payments. 78 percent of the guaranteed benefits will still be paid out at that point in time.

That’s because payroll tax contributions will continue to fund the program.

The press coverage of the statement has a significant impact on the public’s perception of the future of Social Security.

These findings show that media coverage of the trust fund makes many workers fear an unreasonably severe loss to future Social Security benefits,” stated researchers at the Center for Retirement Research in the report.

According to experts, most people should wait to take their retirement benefits until after the publishing of this year’s trustees report. If they’re in good health, have enough money, and their decision doesn’t negatively effect their spouse, they’ll be able to do so.

At the age of 62, some people may be tempted to claim their retirement benefits.

Because of this, Edward Jones’ Scott Thoma, a senior financial analyst, estimates that beneficiaries will see a reduction in their monthly benefits of 25 percent to 30 percent if they begin receiving payments before reaching full retirement age.

If you have reservations about the program in 12 years, don’t file early, according to Thomas. When deciding whether or not to file for bankruptcy, you should constantly consider your unique financial circumstances and needs.

When it comes to the SS program, Larry Kotlikoff, an economist at Boston University and president of Economic Security Planning, believes that waiting is still a good idea.

How quickly should people claim their Social Security benefits? Not at all, according to Kotlikoff.

According to Kotlikoff, measures like tax hikes are more likely because benefit cuts are politically undesirable. If benefits were reduced by 25% in ten years, people would still be better off waiting, he argued.

To learn more information about Social Security Disability Benefits and tips on applying, disability help provides everything you need to know to find out if you qualify and to get a successful application.

Social Security: News headlines should not prompt you to claim early (cnbc.com)

3 Social Security Mistakes to Avoid In 2019

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The Social Security program was designed to provide financial assistance for the millions of adults who are no longer able to work but still have to pay their bills.

If you’re excited to begin retirement but want to make the most of your Social Security benefits, then you should take a look at the three following mistakes that you’ll want to avoid heading into the new year.

1. Being Unaware of Your Full Retirement Age

Typically, Social Security benefits are determined by your lifetime earnings. However, depending on what age you file for retirement benefits, your amount could be affected. If you want to to get the most out of your retirement benefits, you should wait to file until you’re at your full retirement age. Your full retirement age is determined by the year that you were born.

For example, if you were born in 1960, you will be at your full retirement age when you hit 67. If you wait to file for retirement benefits until you’re 67, then you will receive the maximum monthly payments without any penalty. If you decide to file before your full retirement age, you won’t be able to receive the maximum benefits allowed.

Please note that if you were born in 1957, you would be eligible to file for Social Security retirement benefits starting 2019 due to the age 62 being the earliest possible filing age. Also note that if you file for retirement benefits before your full retirement age, your monthly payments will be reduced. We do want to reiterate the importance of understanding the effects of filing for retirement benefits at various ages.

2. Forgetting To Consider Taxes On Your Earnings

While it’s very common to view Social Security as a welfare program, in reality, the benefits paid are funded by you paying into the system and earning sufficient work credits to become eligible for retirement benefits when you’re older. So even though you may sigh when you notice that a piece of your paycheck is sent off to Social Security, it’s important to realize that you’re putting money into a system that will provide you financial assistance when you’re older and no longer expected to work.

The income maximum which Social Security taxes are applied is going up in 2019, meaning if you in a higher-income bracket, you’ll lose a little more money than you did 2018. For 2018, the maximum taxable income for Social Security is $128,400, but in 2019 that amount will go up to $132,900. Those who are earning $4,500 more than they did in 2018 are now subject to Social Security taxes.

If you are employed on a salary, you will be expected to pay a 6.2% tax on the extra $4,500 for a total of $279. If you’re self-employed, however, you’ll need to pay double that amount for a total of $558. Make sure to plan appropriately so you’re not surprised when you see that tax on your bills.

3. Not fighting for a raise

The more income you earn during your lifetime means the more benefit you can collect during retirement. If you’re currently being paid than the average salary at your job, it’s time to talk to your employer and discuss getting a raise.

Don’t rush into the door and slam your fist on the table demanding to get paid more. Instead, do your research and find out how much other people are earning with the same job title as you and compare that to your own salary. If you’re being paid significantly below the average salary for your profession, that’s more than enough reason to point that out to your boss and ask for a raise. Also, create a list of reasons and ways you add value to the company, this could include your specific job skills or by simply being a consistent and hardworking employee. Any of these attributes help your case, take a stand and be vocal about your worth.

The efforts you make next year could affect your retirement benefits from Social Security. If you acknowledge and avoid the mistakes above, then you will be setting yourself up to receive the maximum benefits allowed during retirement while avoiding stinging tax expenses.

Speak To A Social Security Representative

If you wish to learn more on how you can maximize your retirement benefits once you file for Social Security, don’t be afraid to reach out to an official Social Security Administration representative. You can look online to try to find an agent or simply contact your local Social Security office to schedule an appointment.

A Glance at Social Security’s Disability Benefits

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The Social Security and Supplemental Security Income disability programs are the largest of multiple Federal aid programs that help people with disabilities. While these two programs differ greatly, both are run by the Social Security Administration, and only people who have a disabling condition in addition to meeting certain medical criteria can qualify for benefits under each program.

Social Security Disability Insurance provides benefits to you and particular family members if you are “insured,” which refers to the assumption that you worked for a certain period of time and paid into Social Security through taxes.

Supplemental Security Income Provides Benefits Based on Financial Need.

When you submit an application for either program, the SSA will require medical and other information from you and review your case to determine whether or not you meet the Social Security’s definition of disability.

If you’ve recently applied for benefits and were denied, you can submit an appeal online to request a review of the SSA’s decision regarding your application for disability benefits. If your application was denied for medical reasons, then you can fill out and submit the necessary Appeal Request and Appeal Disability Report online. The disability report requires updated information regarding your medical condition and any treatment, tests or physician visits since the SSA’s denial decision.

If you were denied for non-medical reasons, it is recommended that you contact your local Social Security Office to request the review. You can also call the SSA’s toll-free number at 1-800-772-1213, to request an appeal. For individuals who are deaf or struggle hearing can call their toll-free TTY number at 1-800-325-0778