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What you do not know about Social Security could cost you a lot of money



Social security administration increased benefits in 201

7 by 0.3 percent. (1965, 20092) An important part of your retirement planning should be an understanding of your social benefits. This monthly check is a safety net, and the time when you start taking benefits can be a game changer.

"If you have median income, your social security pension will only replace about 40 percent," the Social Security Administration says. "The percentage is lower for upper-income people and higher for low-income people."

So how much do you know about the benefits that will be a big part of your retirement income for many of you?

I'm not asking that, to make you feel stupid. The social security system is complicated. There are many variables to consider when deciding when to claim your benefits.

But the more you know, the sooner you will make a better decision about the right time to gather your benefits.

Let's start with how your services will be calculated.

Mark Miller, who wrote for Morningstar recently had an interesting contribution to the debate on the social security viability threshold.

"Many social security recipients considering a delay want to analyze what they consider to be a key figure: their balanced age or the age at which all lifelong benefits would be received would be equivalent to using a different age bracket", Miller wrote. "Taking advantage early on is beneficial to you if you do not live to retirement age, and it will come out if you delay benefits and then live beyond the break-even point." The loss scenario delays benefits and dies before that Break-even age is reached. "

Miller offers a very simple explanation of how your social security benefits are calculated.

"To determine your benefit amount, the SSA considers your 35-year maximum wage and translates it into what is termed primary insurance," he explains. "If you wait until the full retirement age of 66, you would receive 100 percent of the primary insurance amount, and if you start at 62 (earliest possible opportunity) you will receive a reduced benefit for the rest of your life – 25 percent less If you wait until full retirement age (66), you will receive the delayed retirement loan, which is 8 percent for each 12-month period you postpone.The credits are available until age 70.

Read more about the match behind the break-even point: "When are you having the social security money?"

After reading Miller's post, I began to wonder how much I know. So I did some tests to test my knowledge. I suggest you do the same.

Financial Engines has a quick quiz with eight questions that tests some basic things. Here is an example.

True or False: You get the same monthly social security benefit no matter how old you are when you start collecting.

For your reading pleasure: "What is the maximum social security age? Age 62, 65 or 70? How much you can collect in Social Security may surprise you."

How would you answer this question?

How many years should you work to qualify for social security benefits? You have the choice:

  • There is no minimum
  • 5 years
  • 10 years
  • 35 years

Take the test to see how you get the answers to these two questions] After I had completed the quiz of the financial engines, I went to AARP's true-or-false quiz. Here are two questions from this review.

True or False: A married couple must be married for at least 10 years before a person can collect spousal wages on their partner's list.

For more information, read: "How Divorce Affects Your Rights to Social Security Benefits"

True or False: Foreign citizens can not claim social benefits.

Whether you're right or wrong about this last question, read: "Social Security: 5 Surprising Facts About Noncitizens and Benefits"

I did well on both quiz questions, but every question and answer is looking for me for more information, which I hope you will do too.

Your thoughts
What did you do? learn from the tests? Is there anything about the social insurance that you want you to know before you get your benefit? Send your comments to colorofmoney@washpost.com. Please enter your name, city and state.

Retirement rides and raves
I am interested in your experiences or concerns about retirement or aging. What do you like about retirement? What came as a surprise?

If you have not retired, what is your financial concern? You can chat or romp. This room is yours. It's a chance for you to express what you think. Send your comments to colorofmoney@washpost.com. Please enter your name, city and state. In the subject line "Retirement Rants and Raves"

Violeta K. of Washington wondered what to do with the required minimum distributions to be deducted from her individual retirement account.

"I have taken RMDs for about 5 years," she wrote. "Unfortunately, I do not only pay taxes on them, but I also spend the money, so if I can reduce my expenses a bit, what do you recommend with the money?"

Here are some good advices: "3 Money- Smart Ways to Your RMDs "

Also read: If Not Now Need Your IRA Money, Do It Instead

Last week's Pension Newsletter," How to Live Without Going to Life Before Death. " "I wanted to know: Are you retired and suffering from" spendaphobia "who are afraid of the money you have saved for retirement?

"In the three years prior to my early retirement, I asked my accountant if I had enough to retire," wrote Barbara Thompson of New York City . "The same answer every year, yes." Finally, I told him that I would retire. Then he asked me a simple question: "You were really good at saving." Will you be able to spend money and withdraw money from savings accounts? If the answer is yes, retire. If the answer is no, Keep working. "I knew I could spend the money wisely, so I retired. That was ten years ago, and it was a wonderful retirement!

Martin Berger from Ossining, N.Y., wrote: "It is a major change in the mental gait to move from a saving mentality to a consumer mentality. We now spend more than if we worked because we have a winter home and because we share our investment bonus with our children through an annual gift and contributions to the grandchildren's college savings plans. It's definitely okay to spend your money – assuming you have money! I would wish that everyone like us could save it and enjoy the liberation of having enough money for retirement years. Early on I told our children that they should save for retirement at the very beginning. Too many people are unable, and do not take it seriously, until they are too close to retirement to make a significant change. You do not have to retire lavishly – we still buy carefully and buy things for sale. But it's wonderful to be treated well.

Lynn Sherman of West Hartford, Connecticut, wrote : "I'm a saver by nature, so I make sure line items are in my budget for entertainment, travel and body care. When I realize that I'm spending too little in these categories, I'm planning something beautiful for myself.

Jennifer from Alabama was amazed at the advice for younger retirees and wrote: "When I retired in the '50s I am VERY suspicious that we have run past our savings and it is unclear whether I can really trust the 65- and 75-year-olds. Both are afraid to irreversibly increase our lifestyle (until we go broke) and new costs that are unimaginable today (Who knew that in the 70s, instead of dentures or dentures, we should save money for our children? College for our grandchildren? ).

Loved this article by Donna Rosato: "The New Rules for Early Retirement"

Gerry Vinson of Elizabeth, Colo. wrote, "I spend a reasonable retirement, but I'm not afraid to spend. I am limiting a major spending event at one time per year. This gives my time to recover. I retired in 1998 at the age of 56. Fortunately, I have a company pension check, which is small because of early retirement, along with Social Security. I limit my IRA drawdown to a level that will carry me into my late 90s. If necessary, I can make a reverse mortgage. I've made sure that I have not been in debt since 1998, except that I have to pay a visa bill every month and never demand more than I can handle. Debt-free is a big stress reduction. I have also made a decision that, if the cost of living rises beyond my planning, I will return rather than get back to work. Holidays are enjoyed, but limited to once a year with careful and reasonable cost planning. Happiness is transient, but satisfaction is the true value, and I believe it has more impact on well-being and long-term health.

Pat from Rockville, Maryland, wrote, "Her retirement-spending column came just in time for us. My husband retired from a fairly high paid career at the end of 2017 at the age of 70. Although I'm 67, I still work as a freelancer, but usually do not spend more than $ 20,000 to $ 25,000 a year. I intend to work as long as possible, so we have that extra income, although my husband thinks it's unnecessary, and I want me to stop working or cutting so we can spend more time together. We were always careful with money. We pay cash for cars (which we keep for 10 years or more), and we paid our mortgage a few years ago. However, we never kept a budget and never felt the need to do so, as our income (mainly income) was sufficient to pay the bills, provide discretionary income, and save a lot (including full contributions to IRAs). The good news is that it looks like we have enough to live comfortably in retirement. The bad news is that I'm afraid I will not have any more money if we have unexpected medical or other expenses and / or if the stock market crashes or if I live too long (90s and even 100+ are not for my dad's family unusual). We want to travel while we are still healthy enough, but I can not help it if I see that every major trip costs between $ 5,000 and $ 10,000. (Our daughter and her family live overseas.) But I'm not worried about the money we spend on a regular basis for food or my little treats like ice cream and bubble tea – though these expenses are down to a few hundred dollars each month can amount to. My husband, on the other hand, thinks we should cut the restaurant down a bit and handle the expenses, but he's not worried about the big travel expenses (or thinks they're important enough to be justified). I guess it's good for me to keep worrying about running out of money if it keeps me from spending unnecessary high expenses, but it would be nice to enjoy the retirement and the fruits of our decades of work and savings , I hope to find a financial and psychological balance soon. "

If you've found your balance, share your tips on how to spend without fear, and still make sure that you do not go overboard Send your comments to colorofmoney@washpost.com

For those Those who struggle against the fear of retirement or lack of money read: "Their fear of retirement could ruin it"

Newsletter Comments Politics
Please note, it is my personal policy to identify readers, answering questions I put in my newsletters I find it encourages thoughtful and civic conversation I want my newsletters to be a safe place to express your opinion In sensitive matters or on request, I am happy only But I do not want to post anonymous comments (I make exceptions when I ask questions that expose sensitive information) or to cause conflicts.)

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