According to "Money on CNN Money.com" by Walter Updegrave "What you need to know about Social Security", some interesting issues are addressed and some are more encouraging than the scuttlebutt we have been hearing from our uniformed highly opinionated sources.
Many of us worry about our 401ks and IRAs but what do you know about Social Security. It is the foundation for your retirement plans! In fact Social Security Money provides 50% of the income for more than half of retired couples and 20% for high income earners.
It is probably the only source of income that you will have able to offset inflation and be guaranteed to last the duration of your life.
(1) Can I count on Social Security to be there when I retire? According to "What You Need to Know about Social Security", you can depend on it to be there for you! How many times have we heard that it will go broke before we are old enough to qualify for benefits?
Payments for all retirees will be covered by payroll taxes until 2016 even if no changes are made to the program. After that the Social Security Administration can cover full benefits until 2037 by cashing in Treasury Bonds from the SS Trust Fund. And when the bonds run out, the income from payroll taxes can pay for at least 75% of all retirees for decades!
The Obama Administration is looking for ways to provide longevity to the system. They have considered imposing Social Security payroll taxes on incomes over $200,000. Perhaps raising the retirement age, or increasing payroll taxes or diminishing benefits in some way.
According to Bruce Schobel, who worked on the commission headed by Alan Greenspan to fixed the system back then, anyone 55 or older is likely to see no change or a perhaps only minimal changes to the system. Even younger workers can be assured that large cuts are unlikely.
(2) How much will I get every month? The formula for Social Security can be complex, but your benefits are based on your average lifetime earnings-more specifically over the highest 35 years of your working years.
Social Security checks are automatically adjusted for inflation. In 2009 payments were increased by 5.8%. Conversely the Congressional Budget Office estimates that there may not be an increase for inflation in the next several years due to lack of inflation.
(3) At what age should I begin collecting Social Security? Even though it pays to wait, most people take benefits before full retirement age. If you have an average or better life expectancy you might be well advised to wait a bit longer to collect. You will not collect quite as long but you will collect more at a time when you are unable to work to supplement your income.
You can increase the size of your SS checks by waiting until you are "full retirement age" or even later to collect. For instance, age 66 would yield full retirement benefits for most people, and waiting until age 67-68 will raise benefits to 110%, and waiting till age 69-70 can result in 120%-130% of full retirement benefits respectively. But your betting against your longevity if you wait longer.
(4) If I work, will I lose benefits? If you retire early and work your benefits are likely to be reduced but if you want to work after you have reached full retirement age, then there is not effect on your Social Security benefits according to the source quoted at the beginning of this article. In fact they say that if you work after full retirement Social Security will begin compensating you with a larger check for the benefits withheld and you'll receive higher payments for the rest of your life.
(5)Will my SS benefits be taxed? Although that is a question best reserved for your tax person, about one third of retirees currently pay tax on a portion of their benefits, as working during your Golden Years will raise your taxable income for those years.
According to "What You Need to Know about Social Security" by Walter Updegrave, "one of the best ways to lessen the tax bite is to wait at least until "full retirement" before receiving benefits."
"Another way is to take money out of a Roth IRA instead of your 401k because Roth withdrawals don't count as income when figuring if your benefits are taxable. So if you don't already have money in a Roth, you may want to fund one or convert some of your traditional IRA to a Roth."
Most of us would be well advised to not put all our eggs in one basket. If you can combine a pension with Social Security and even start a small business for your retirement years such as an online business, your retirement would more likely become "Golden Years".
Many of us worry about our 401ks and IRAs but what do you know about Social Security. It is the foundation for your retirement plans! In fact Social Security Money provides 50% of the income for more than half of retired couples and 20% for high income earners.
It is probably the only source of income that you will have able to offset inflation and be guaranteed to last the duration of your life.
(1) Can I count on Social Security to be there when I retire? According to "What You Need to Know about Social Security", you can depend on it to be there for you! How many times have we heard that it will go broke before we are old enough to qualify for benefits?
Payments for all retirees will be covered by payroll taxes until 2016 even if no changes are made to the program. After that the Social Security Administration can cover full benefits until 2037 by cashing in Treasury Bonds from the SS Trust Fund. And when the bonds run out, the income from payroll taxes can pay for at least 75% of all retirees for decades!
The Obama Administration is looking for ways to provide longevity to the system. They have considered imposing Social Security payroll taxes on incomes over $200,000. Perhaps raising the retirement age, or increasing payroll taxes or diminishing benefits in some way.
According to Bruce Schobel, who worked on the commission headed by Alan Greenspan to fixed the system back then, anyone 55 or older is likely to see no change or a perhaps only minimal changes to the system. Even younger workers can be assured that large cuts are unlikely.
(2) How much will I get every month? The formula for Social Security can be complex, but your benefits are based on your average lifetime earnings-more specifically over the highest 35 years of your working years.
Social Security checks are automatically adjusted for inflation. In 2009 payments were increased by 5.8%. Conversely the Congressional Budget Office estimates that there may not be an increase for inflation in the next several years due to lack of inflation.
(3) At what age should I begin collecting Social Security? Even though it pays to wait, most people take benefits before full retirement age. If you have an average or better life expectancy you might be well advised to wait a bit longer to collect. You will not collect quite as long but you will collect more at a time when you are unable to work to supplement your income.
You can increase the size of your SS checks by waiting until you are "full retirement age" or even later to collect. For instance, age 66 would yield full retirement benefits for most people, and waiting until age 67-68 will raise benefits to 110%, and waiting till age 69-70 can result in 120%-130% of full retirement benefits respectively. But your betting against your longevity if you wait longer.
(4) If I work, will I lose benefits? If you retire early and work your benefits are likely to be reduced but if you want to work after you have reached full retirement age, then there is not effect on your Social Security benefits according to the source quoted at the beginning of this article. In fact they say that if you work after full retirement Social Security will begin compensating you with a larger check for the benefits withheld and you'll receive higher payments for the rest of your life.
(5)Will my SS benefits be taxed? Although that is a question best reserved for your tax person, about one third of retirees currently pay tax on a portion of their benefits, as working during your Golden Years will raise your taxable income for those years.
According to "What You Need to Know about Social Security" by Walter Updegrave, "one of the best ways to lessen the tax bite is to wait at least until "full retirement" before receiving benefits."
"Another way is to take money out of a Roth IRA instead of your 401k because Roth withdrawals don't count as income when figuring if your benefits are taxable. So if you don't already have money in a Roth, you may want to fund one or convert some of your traditional IRA to a Roth."
Most of us would be well advised to not put all our eggs in one basket. If you can combine a pension with Social Security and even start a small business for your retirement years such as an online business, your retirement would more likely become "Golden Years".
