Social Security is a fairly simple idea and CAPTRUST at Work has useful resources to help break it down. During your career you and your employer pay a portion of your income into the Social Security trust fund. In return, you will receive a benefit when you need it the most, at retirement or if you become disabled. Your family members may receive benefits based on your earnings record as well, depending on various factors.
Social Security Eligibility
When you work, you pay Social Security taxes that earn credits which will allow you to qualify for Social Security benefits. Individuals can earn up to 4 credits per year, this can vary based on your income. Most people build up 40 credits to be eligible for Social Security retirement benefits but fewer are usually needed for disability benefits.
Your Retirement Benefits
Social Security is based on your average earnings over your career. Your age at the time you start receiving Social Security will also affect your benefit amount. Those born between 1943 and 1954 will be considered full retirement age at 66. Full retirement age increases in two-month increments after this point until it reaches age 67 for anyone born in 1960 or later. You don’t have to wait for full retirement age to begin receiving benefits, you can begin as early as 62. You can also delay receiving benefits past full retirement age which will increase your benefit by 8% for every year you wait.
A Piece of the Puzzle
While Social Security is almost never enough for retirement, it’s an important piece of the puzzle. As TIAA discusses in their How to Plan for Retirement Income article, it’s important to diversify your portfolio to offer multiple income sources to ensure that you have enough income to maintain your desired lifestyle and feel secure. These sources can include Social Security, lifetime income from pensions or annuities and portfolio withdrawals from your retirement and investment portfolios.
Will Social Security Last
In CAPTRUST’s, Will Social Security Run Out of Money?, they explore the viability of Social Security. Many worry that Social Security may be eliminated before they are able to receive their benefits. CAPTRUST states that it’s unlikely that Congress will not make adjustments before it’s depleted but even if that were the case, benefits wouldn’t vanish overnight and benefits would be reduced but not eliminated entirely.
According to a recent study by the Social Security Trustees, by 2035, even if the fund were depleted, Social Security would still be able to pay 83 percent of scheduled benefits from the incoming payroll tax portion of the fund. In 2098, it would still be able to cover 73 percent of scheduled benefits. So even if Congress chose not to act, Social Security would still be able to pay a sizable portion of benefits for multiple generations to come.
For guidance on your retirement plans, CAPTRUST at Work and TIAA offer complimentary consultations to UNC retirement eligible employees. To schedule a meeting with a Financial Consultant with CAPTRUST at Work, click here or with to schedule with TIAA, click here.
For the full articles on Social Security and Retirement Income from CAPTRUST at Work and TIAA, please click the following links.
For CAPTRUST’s Understanding Social Security, click here.
For TIAA’s How to Plan for Retirement Income, click here.
For CAPTRUST’s Will Social Security Run Out of Money, click here.