Understanding Social Security

There is a lot of talk, especially as you get older, about social security benefits and how it can and does help people. Unfortunately, however, many people do not accurately understand social security and what it is and does.    

To put it in basic terms, social security is a government program that is funded by payroll taxes. These taxes are paid by employed and self-employed workers, as well as employers. The taxes, which are collected under the Federal Insurance Contribution Act, go to support a wide variety of approved programs, including:

·         Old-Age Insurance

·         Disability Insurance

·         Survivor’s insurance

A great many people benefit immensely from these programs, including:

·         Elderly Americans

·         Disabled workers

·         People who have lost spouses/parents

As a worker yourself, you stand to benefit from social security funds. In fact, while you work, the Social Security Administration tracks your earnings and, after retirement, offers you a social security benefit based on how much you have earned in your life and the age at which you retire. Generally, the longer you work, the higher your social security benefit will be.

If you are curious about approximately how much your own social security benefit will be and/or would like to know this amount to accurately plan for retirement, visit the official governmental Social Security site and use the benefit calculator. You can also get an accurate estimate of your benefit by working with a finance or tax professional.

A tax or finance professional can also assist you in determining how to increase your social security benefit, such as by putting off retirement and through other strategies. Getting professional help is wise to help you accurately and fully plan for retirement and to make the most of your social security benefit.

Related articles

• The Life Cycle Model, Replacement Rates, and Retirement Income Adequacy (aei.org)