Social Security serves as a financial safety net for many Americans preparing for retirement. It’s imperative to understand the basics of Social Security and its benefits, so we recently hosted an interactive seminar that details how it works. We’ve highlighted a few key takeaways in case you missed it!
Prior to the onset of Social Security, the US had no government-mandated disability insurance, retirement savings or health insurance for the elderly. Oftentimes, the end of work due to injury or old age meant the end of income. In 1935, the Social Security Act was signed into law, which created the Old Age Survivor Disability Insurance benefit. Since then, Social Security has undergone many changes and recommendations to improve its benefits. However, the future of Social Security is in question as trust funds that cover benefits will become depleted and payroll and Social Security taxes will only cover 75 percent of benefits.
How Social Security works
Social Security aims to provide four basic benefits. For eligible workers, it ensures retirement benefits and disability benefits. Eligible workers’ families receive dependent benefits and survivor benefits. If an individual chooses to receive benefits earlier than their full retirement age, benefits are reduced for the rest of the individual’s life. Specifically, they are reduced by about 0.5 percent for each month the benefits are received before full retirement age. In the case of an early retirement, benefits can begin as early as 62.
If an individual chooses to retire later, delaying benefits equates to an automatic increase, or delayed retirement credits. The increase is contingent on the length of time from full retirement age until benefits begin, or until the age of 70 – whichever comes first.
In addition to the basics of Social Security, we also addressed more complex areas of Social Security, such as working while receiving benefits and coordinating spousal benefits, which should be done on an individual basis by using actual ages and information. Check out the Social Security presentation below to read about these specifics and to find more helpful information.