Thursday, October 18, 2012, AM | 1 Comment
As an immigrant, I could never understand social security rules. It seemed quite a load of mambo jumbo. But it’s not hard to understand it when you read through its description. Really! When a person takes part in the system, a certain percentage of the income is deducted from their paycheck. That amount goes to a pot where everyone’s share is saved.
On the outset, at any time, when you read about it, the money in the shared-pot seems quite a large sum. Actually, the money comes through one door and some parts of it go through another door to folks who are retired and who had taken part in the system.
We are told if nothing beneficial to the system is done, the shared-pot will be depleted 20 or so years from now. We keep hearing about it during the presidential campaign and debates, but nothing has been done so far.
Can you make it simpler?
Nope! 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?
Nope! You gotta show me all your 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 and how much money you have contributed to the shared-pot.
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 current online table published by the Social Security Administration Retirement benefits by year of birth.
Can you give me a dollar figure when I start collecting at 70?
The answer is again NO. 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 would 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 may be work.Facebook.com/doable.finance