If you are considering retirement, it is important to carefully plan and budget to ensure you can meet your retirement savings goals in a timely manner. In addition to regular savings, you may be entitled to supplement your retirement with Social Security benefits. Learn more about Social Security below to see how it can significantly contribute to the financial future of your family.
How Do Social Security Retirement Benefits Work?
As you spend your lifetime working and earning an income, you regularly pay taxes into the Social Security system at a rate of around 6.2%, with your employer matching this amount. This money is used to distribute benefits to those currently earning them, including disabled individuals, survivors of workers who have passed away, people who have retired, and the dependents of beneficiaries. Any money that is left over is deposited into a Social Security trust fund for you and your family to access monthly benefits after you retire.
Beneficiaries receive an average of 40% of the income they generated pre-retirement. Estimating an approximate amount you can expect to receive in Social Security benefits provides you with a starting point for determining how much additional savings you will need to reach your retirement goals.
Am I Eligible?
As you pay Social Security taxes, you are earning credits toward your own future benefits. The year you were born determines how many credits you are required to earn before you can receive benefits. If you were born in 1929 or after, you are required to have earned 40 credits to begin earning benefits. This usually translates to 10 years of work.
The amount of benefits you and your family may receive is dependent on the earnings found in your work record. You can create a Social Security account online to check your earnings history. There is a Retirement Calculator on this website that can provide you with personalized benefit estimates to learn how your retirement age will impact your future income.
At What Age Should I Start Receiving Benefits?
The age you start receiving Social Security retirement benefits affects the amount you can expect to receive. You can choose to receive benefits at full retirement age, early retirement age, or delayed retirement age.
Full retirement age is the age at which you can collect the full benefit amount. If you were born from 1943 to 1954, this age is 66. From a birth year of 1955 to 1960, this age gradually increases to 67. If you were born in 1960 or later, full benefits are available at 67.
In terms of early retirement, you may begin receiving benefits from age 62 onward, but your benefit amount will be reduced in comparison to waiting until full retirement age.
If you choose to delay your retirement beyond full retirement age, your benefits will continue to increase up to age 70. Every extra year of work results in an extra year of benefits. If you wait until age 70 to retire, this translates to an 8% increase every year
While you don’t need an attorney to obtain your social security retirement benefits, you should certainly consult with an attorney if you are looking into Social Security Disability benefits. If you are interested in applying for SSD, contact our experts today to learn more.