The average monthly social security pension has recently been $ 1,420, or about $ 17,000 a year. (For a notion of maximum, you should consider higher earners whose maximum benefit for individuals retiring in full-age retirement in 2019 is $ 2,861 per month or $ 34,000 per year per month.) This does not seem to be enough to help you in your old age Why you need to save with your own money for retirement.
However, social security is likely to be a major contributor to your future financial security. It is worthwhile to learn a little more about it. And while you're at it, it's worth your while to count your social security blessings. Here are 1
1. Without social security, millions of people would be in poverty.
This is a big problem. Without a social security income, 22 million Americans would live in poverty, according to a report by the Center for Budget and Policy Priorities. That says a lot, considering how low the official poverty line is ($ 12,140 for individuals and $ 16,460 for a two-person family).
Here is another eye-opening statistic: "For older people, social security is pushing poverty by 75%, according to a report by the National Bureau of Economic Research from 2018.
2. Social security accounts for a large part of the income
One-third of the income of older Americans is composed of social benefits.
According to the Social Security Board, 21% of married elderly were welfare recipients and 44% of unmarried people received 90% or more of their income from the program whereas 48% of married elderly social assistance recipients and 69% of unmarried people receive 50% or more of their income from it.
3. It is really easy to qualify for social security benefits.
Social security is not just It is also relatively easy for many people to become aware of themselves To qualify r retirement. You qualify by paying into the program for all the years you work.
You must earn 40 credits within a year, with a balance of at least $ 1,360 (as of 2019) within one year, with up to four credits earned per year. As a result, most people can easily qualify to work for a decade and earn at least $ 1,360 per quarter from 2018 (that's $ 5,440 for the year). The amount of benefits you receive is based on the average of your 35 most profitable years
4. With Social Security, you can start collecting early.
If you do not know your "full" retirement age for Social Security, you should do so. It's the age from which you can get your full benefits, and it used to be 65 years old, but for many of us it has been increased. For those who were born in 1937 or earlier, there are still 65, for those born in 1960 or later, it is 67, and for those born between 1937 and 1960, it is somewhere in between.
Here is a nice thing: No matter what your full retirement age, you can start with the collection of your benefits from the age of 62 or only at the age of 70. The most common age at which retirees receive benefits is actually 62. Millions of Americans use the fact that social security helps you retire early.
. 5 With social security you can increase or decrease your benefits.
Although you may feel that you can barely control the level of your social security checks, you can actually make checking your retirement benefits larger or smaller than you would have if you started collecting them during your full retirement age – by sooner or later you started collecting.
For each year that exceeds your full retirement age and you delay the onset of benefits, increase their value by about 8%. until the age of 70 So if you delay between the ages of 67 and 70, you can be about 24% richer. This works the other way around if you start collecting early. For every year you start your full retirement age, your performance will shrink by about 7%. So, if your full retirement age is 67 and you earn benefits at the age of 62, your check will be 30% lower. (There are other ways to increase your social security benefits.)
6. Social security does not punish you for starting collecting early.
Since you can receive larger checks when you arrive at a longer delay, you should definitely try to delay as long as possible so you do not get less money from Social Security altogether. But it does not work that way. The system is designed so that the overall performance is roughly equal regardless of when you start collecting if you lead an average life. Checks that arrive at the age of 62 will be considerably smaller, but you will get much more. (If your family gatherings are full of people in their 90s, it may be worth the delay.)
7. Social security allows overturning.
It can be difficult to decide when to start collecting benefits, and you will probably regret it if you regret your decision soon after making your decision. For example, you may have started to collect because you lost your job and did not expect to find another – but then you found one. Social security is forgiving in this regard, as you can change your mind within 12 months after you start collecting benefits, and as long as you repay all benefits you have paid so far. (You will need the form SSA-521 to do this reversal.)
8. Social security supports more than just pensioners.
Not only pensioners should be thankful for social security. While 45.5 million retired workers and their dependents received retirement assets in December 2017, 10.4 million disabled people and their dependents and 6 million survivors of deceased workers also received survivors' benefits.
Disability survivorship benefits many people to avoid a financial disaster. Concerning the survivor benefits for family members of eligible workers who are dying, the Budgets and Policy Priorities Center stated that "For a young average income worker, a spouse and two children, this is equivalent to a life insurance policy with a face value of Social Security Actuary in the year 2018 over $ 725,000. "
. 9 Employers make a significant contribution to social security.
You do not like paying more than 6.2% of your social security paycheck during each pay period, but be grateful for that fact: the total tax is actually 12.4% and your employer coughs the others 6.2%. (Unfortunately for self-employed people it is 12.4%.)
10. Social security aims to keep up with inflation.
Another blessing in the social security system is that benefits with inflation are set to increase step by step, which is achieved through annual cost of living (COLA) adjustments. This means that the benefits are linked to the increase in prices, so that retirees today can maintain the same quality of life as in twenty years.
For 2019, benefits receive the biggest boost they have been able to sustain for a long time – a 2.8% increase. The increase in 2018 was only 2%, well above the 2017 increase of 0.3% and 2016, when there was no increase at all.
. 11 As good as it gets, the program can be made even stronger.
The media often talks about the imminent end of social security. However, it will not go anywhere in the near future. The program faces some challenges, but Congress can strengthen or weaken it. In a worst-case scenario, retirees had around 75% of expected benefits. That would be painful, but it will leave a considerable income.
If and when our representatives in Washington seek to strengthen or strengthen social security, there are a handful of effective ways to do so. For example, starting in 2019, workers will only be taxed on incomes of up to $ 132,900. Someone who earns $ 132,900 and someone who makes $ 1,132,900 pays the same amount. The removal or elimination of this ceiling could account for a large part of the impending underfunding of social security.
12th This is a great example of efficiency.
Here's one last reason to be grateful for Social Security: Not only is it a massive program – with a budget of about a trillion dollars – but it's also an impressively efficient program that only 0.6 spends% of this budget on administrative costs.
Social Security, set by President Roosevelt in 1935 during the Great Depression, was a great blessing to Americans, who offered a degree of financial security in their old age. It's worth learning a lot about, so you can take smart social security measures in due course to maximize your benefits and enjoy your retirement.