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The Benefits & Retirement Center
Social Security |
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SOCIAL SECURITY
Social Security has a vast network of programs. This basic retirement information is from that source. (For more detailed information, Click on the link below)
Social Security helps not only older Americans, but also workers who become disabled, and families in which a spouse or parent dies. Today, more than 156 million people work and pay Social Security taxes and more than 47 million people receive monthly Social Security benefits. Most of our beneficiaries are retirees and their families—about 32 million people. But Social Security was never meant to be the only source of income for people when they retire. Social Security replaces about 40 percent of an average wage earner’s income after retiring, and most financial advisor's say retirees will need about 70–80 percent of their work income to live comfortably in retirement. To have a comfortable retirement, Americans need much more than just Social Security. They also need private pensions, savings and investments.
The current Social Security system works like this:
When you work, you pay taxes into Social Security.
The tax money is used to pay benefits to:
• People who already have retired;
• People who are disabled;
• Survivors of workers who have died; and
• Dependents of beneficiaries.
The money you pay in taxes is notheld in a personal account for you to use when you get benefits. Your taxes are being used right now to pay people who now are getting benefits. Any unused money goes to the Social Security trust funds, not a personal account with your name on it.
Today there are about 35 million Americans age 65 or older. Unless action is taken to strengthen Social Security, in just 13 years we will begin paying more in benefits than we collect in taxes. Without changes, by 2042 the Social Security trust funds will be exhausted. By then, the number of Americans 65 or older is expected to have doubled.
*If you work for someone else, you pay 6.2% Social Security tax, and 1.45% Medicare tax.
Your employer pays the same amounts 6.2% Social Security tax, and 1.45% Medicare tax.
* If you are Self-employed, You pay 12.4% 2.9%.
How you become eligible for Social Security
As you work and pay taxes, you earn Social Security “credits.” In 2005, you earned one credit for each $920 in earnings—up to a maximum of four credits per year. (The amount of money needed to earn one credit goes up every year.) Most people need 40 credits (10 years of work) to qualify for benefits.
Retirement benefits
Choosing when to retire is one of the most important decisions you will make in your lifetime. If you choose to retire when you reach full retirement age, you will receive your full retirement benefits. But if you retire before reaching full retirement age, you will receive reduced benefits for the rest of your life. If you work past your full retirement age, you will get full retirement benefits no matter how much you earn. If you continue working and decide not to collect your retirement benefits until you reach age 70, you will get higher benefits when you retire. If you choose not to collect retirement benefits before you reach full retirement age, you should be sure to file for Medicare benefits within three months of your 65th birthday. If you wait longer, your Medicare medical insurance (Part B) may cost you more money.
Full Retirement Age
Year of birth Full retirement age
1937 or earlier 65
1938 65 and 2 months
1939 65 and 4 months
1940 65 and 6 months
1941 65 and 8 months
1942 65 and 10 months
1943-1954 66
1955 66 and 2 months
1956 66 and 4 months
1957 66 and 6 months
1958 66 and 8 months
1959 66 and 10 months
1960 67
You may start receiving benefits as early as age 62. However, if you start your benefits early, your benefits are reduced permanently. Your benefit is reduced about one half of one percent for each month you start your Social Security before your full retirement age.
For example, if your full retirement age is 65 and 6 months and you sign up for Social Security when you are 62, you would only get 77.5 percent of your full benefit.
NOTE: The Reduction will be greater in future years as the full retirement age increases.
If you work, but start receiving benefits before full retirement age, $1 in benefits will be deducted for each $2 in earnings you haveabove the annual limit.
Here is a list of some of the documents you may need when you sign up for Social Security:
• Your Social Security card (or a record of your number);
• Your birth certificate;
• Your children’s birth certificates (if they are applying);
• Proof of U.S. citizenship or lawful alien status if you (or a child who is applying) were not born in the United States; When you are ready to apply for benefits.
• Your spouse’s birth certificate and Social Security number if he, or she is applying for benefits based on your earnings;
• Marriage certificate (if signing up on a spouse’s earnings);
• Your military discharge papers if you had military service;
• Your most recent W-2 form, or your tax return, if you are self-employed.
We will let you know if other documents are needed when you apply.
How benefits are paid
Social Security benefits generally are paid by direct deposit, or by check. Direct deposit is a simple, safe and secure way to receive your benefits. Be sure to have your checkbook, or account statement with you when you apply. | Need more Social Security information call: 1-800-772-1213, or click on this link: Plan your retirement | | | |
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