06 Oct Social Security & Retirement Basics To Know
It’s no secret how confusing and stressful dealing with Social Security benefits can be. Whether it is learning the basic or complicated aspects of the program, being as knowledgeable on any part of it is beneficial. With the more knowledge you have on how the program operates, the better you will be off to help amplify the amount your monthly benefit checks will be. We will break down the major basics to know and these will be the most critical pieces to fully understand so you can help set up your future after retirement properly.
One of the basic pieces of knowledge you should know is the exact retirement age you possess. This is considered to be probably the most crucial piece of information you should know and be aware of. According to the Social Security Administration, your retirement age would be 66 years and 10 months if you were born in 1959 and if you were born in 1960 and any year after, your full retirement age would be 67 years old. Depending on whatever age your full retirement age is, this is where you will be able to receive the full benefit amount that you are qualified for
Next is knowing how your work years affect the amount of monthly benefits you will be receiving. If you want to set yourself up to obtain as much of these retirement benefits as possible, you will have to be working for a full 35 years to do so. The way this works is the Social Security Administration takes the average income of the highest income years you have had during your years of work.
The Social Security Administration keeps track of how much you earn each year as well. Then, your benefit is calculated based on the 35 working years when you earned the most money when you retire. (Your past wages are indexed to bring them in line with current wage levels.) To get an idea of what your benefits might be when you retire, use the Social Security retirement estimator tool.
With all this in mind, one thing to keep in mind is that most Americans think the money they pay into Social Security goes into a personal account. That’s a misunderstanding of how Social Security works. Contributions you make don’t go into a lock box with your name on it where they sit and earn interest. Instead, the money goes into a general trust fund. When you retire, the money you receive will come from contributions of those currently working.
Majority of Americans also do not know about all the social security benefits they can be receiving or eligible for. These include survivor benefits, disability benefits, retirement benefits, and Supplemental Security Income.