At 61, Here Is My Research About Social Security
Sat Apr 25, 2009, 1:29 pm | Leave Comment
I never bothered to learn about social security and accordingly my benefits. Now that I am getting closer and closer to retirement, I thought about doing some research. I just turned 61 so I must know. Almost every year, the Social Security Administration send me a letter stating what my benefits would be. It also includes the statement what my wife and my kids would receive, if anything, in case I die.
Here is a brief description of my research.
- What the heck is Social Security (SS)?
The first time I heard about SS was when I first migrated to the States in the 70s. I thought the Government will give money to people when they retire by being social. The more social, the more money they get. The only work I had to do was being social. Because many of us – the new immigrants – at that time thought money grew on trees in the U.S., and SS was simply a part of it.Needless to say, like so many other things, we were so wrong about SS. On the contrary, people have to work hard all their lives to be eligible to receive SS when they retire. Everyone must take part in the system now when they are younger to get benefits later. The younger generation must chip in to support the older generation, just like the present day retirees chipped in when they were younger. And this cycle must go on in the foreseeable future.
Contributions take the form of the Federal Insurance Contributions Act (FICA) taxes that are withheld from most paychecks. To be sure, you should check your paycheck stub.
- Where did this system come from?
It was not sent to us directly from heaven, like Manna. That’s for sure. Actually, Social Security was established in 1935 by the Social Security Act. Before that, support for the elderly wasn’t a federal concern – it mostly fell to states, towns and, of course, families.
- As long as we are on the subject, what’s Medicare?
Medicare benefits are commonly considered part of Social Security benefits, although technically Medicare is a separate program. Medicare contributions are withheld from your paycheck in much the same way as your Social Security contributions; FICA taxes support Social Security and Medicare.
- Is it only for me and you when we retire?
No way, Jose. Disability and survivor benefits are included in the program. Contributions you make provide insurance in the event you become disabled; they also may cover your adult child if he or she becomes disabled before age 22.And, assuming you worked enough to qualify for retirement benefits, your spouse and children can receive Social Security survivor benefits after you die.
- I still don’t understand the process. You know – the works
You accumulate credits based on your earnings. In 2008, you get one credit for every $1,050 you earn – that figure is adjusted higher each year, up to a limit of four credits per year. These credits remain on your record even if you change jobs or stop working for a while.If you were born after 1929, you need 40 credits in order to receive Social Security retirement benefits.
- Are you and me eligible for SS benefits?
Of course, we are. Well! you have to take part in the system. It’s not like you migrate to the States like I did and you start collecting. You must work for at least 10 years which is the minimum amount of time required to earn the mandatory 40 credits – 4 credits a year times 10 years.Even if you have accumulated your 40 credits, however, you can’t start getting payouts until you are 62 or older. That’s one more year for me to start collecting if I choose to retire next year.
- I didn’t understand the credit thing – can you explain?
The Social Security Administration (SSA) mails out a summary of your benefits each year, about three months before your birthday. You can also request one by calling the SSA (800-772-1213) and asking for a form SSA-7004, or by downloading Request for Social Security Statement.Your statement provides a record of your earnings history, the number of credits you have accumulated to date, and an estimate of the retirement benefits available if you wait until full retirement age. Because your benefits depend on your lifetime earnings, check the statement closely to make sure all the information is accurate.
- A while back, you mentioned Medicare. What’s its eligibility criteria?
You are eligible for Medicare benefits once you reach 65, provided you have accumulated the necessary 40 credits. Life is not that simple. You have to abide by the law, the rules and regulations to get the benefits of living in the States when the time comes. It has to be Kosher.
- When can I start getting payouts? Now, that’s music to my ears.
The earliest you can start collecting Social Security retirement benefits is age 62; the latest is age 70. When you start collecting payouts in that eight-year span is up to you.Your actual retirement date doesn’t matter. You can retire before 62 if you like, and you can retire after 70. If you retire before 62, though, you will have to make sure you have enough money set aside to support you until Social Security payments kick in.
- You are 40 now. Why should you wait past age 62 to start collecting?
The government makes you wait until “full retirement age” in order to start collecting the full retirement payout that you have earned.
- what’s full retirement age you ask?
It used to be 65, but Congress voted in 1983 to raise it to 67 for everyone born in 1960 or later. For those workers born between 1938 and 1960 – one of them is yours truly, the full retirement age varies depending on your birth year. To find out yours, refer to the Social Security online retirement planner.
This is all such mambo jumbo. Can you make it simpler?
Nop! That’s the way it is, man. If you don’t understand it, wait till you get to be my age. Then you have to understand it. By the way, understanding all this mambo jumbo is not mandatory. You will get what’s coming to you. There is no escape. The big money will come to you one day. Huh? The big money?
Back to the subject at hand.
- Can you give me a dollar figure when I start collecting at 62?
Nop! you gotta show me all you earnings over the past so many years. Even then I won’t be able to tell you. However, I can tell you this. It depends on when you were born.For example, if you were born between 1943 and 1954 – again one of them is yours truly, your payouts will be reduced 25% if you start receiving benefits at age 62. What a bummer! That reduction is permanent – again, what a bummer – that is, the 25% reduction applies not only to the money you collect between age 62 and 67, but all the money you will collect for the rest of your life.
To figure out the reductions based on your age, check out the online table published by the Social Security Administration Retirement benefits by year of birth.
That means, next year when I turn 62 and start collecting SS, my benefits will be 25% less for the rest of my life. Well! I guess everything is fair in war and love. I don’t know which one fits here.
- Can you give me a dollar figure when I start collecting at 70?
My answer is again NO. That’s N and a big O. But I tell you this. Your benefits payment goes up 8% – WOW – for every year after full retirement age that you delay collecting payments. Until you turn 70, of course – that’s the longest you can delay. There is no benefit to delaying past age 70; you would just be throwing money away. There is a limit to everything even your age.
- Can I start collecting benefits if I am still working?
Hush, man. hush. You don’t wanna say it out loud. If you decide to start collecting benefits when you are not yet retired – is that the question?, the government will cut your payouts according to a formula based on how much you earn. That formula is best kept secret.
- How big will my payouts be?
The annual benefits statement that the Social Security Administration sends you gives an estimate of how much you will get if you wait until full retirement age. You can also estimate your benefits by using the SSA’s online calculators and/or worksheet.The younger you are, the less accurate your estimate will be, because your as-yet-unknown future earnings will play an important role in all of this.
So what’s the best age to start getting payouts?
Do you have a way of knowing how long you will live? Let me put it this way, do you know when you are gonna die? Maybe you do. I sure don’t. Let’s not talk about SS in this case unless you have one of those Captain Sinbad crystal balls that you can look inside and know.
I curse the time when I made the decision to share my research with you
Hey, man. You can stop reading if you want right now. The information is free anyway. Even if you paid for it, which you didn’t, this information is money-back guarantee. So If you stop, I won’t blame you. I gotta stop as well before I go crazy with this. I mean I still have one more year if I chose to collect at 62. So why bother.
In a Nutshell
If you are 61 years young, you should be in a position to know a little about your social security benefits – what’s coming to you. Understanding social security is not mandatory. You will get the money when the time comes if you have taken part in the system, like maybe work.
Related Posts On Doable Finance dot Com
Click on the left to read more similar articles.
