Learn and Plan:
The Role of Social Security

Social Security was never meant to provide a comfortable retirement in itself. It was intended to supplement other resources. But despite that, 22% of all retirees rely on social security as their sole source of support.

And that income is hardly lavish. In 2005 the maximum social security benefit for someone who retires at full retirement age is $23,534 per year. The benefit paid out to a medium wage earner is considerably lower: $15,499 per year. By 2015, the median annual benefit is expected to be about $21,600 (in inflation-adjusted dollars), while the maximum is expected to be around $32,000.

Qualifying for Social Security Benefits

You must work and pay social security taxes for at least 10 years to qualify for retirement. To calculate your benefit, the Social Security Administration takes into account your highest-paid 35 years of employment. You can pick up work "credits" from working part-time and through self-employment, as long as you report your earnings and pay the self-employment tax.

Although 65 is generally thought of as the age at which people are entitled to full Social Security benefits, full retirement age is edging up. Starting with people born in 1943, the age at which full retirement benefits are paid is 66. And people born in 1960 and later won't reach full retirement age until 67.

You can start collecting social security retirement benefits as early as age 62, but the benefit amount will be reduced. If you don't need the money, you're probably better off waiting until full retirement age to start collecting.

Each year the government sends customized notices to all workers age 25 and up, showing an estimate of how much you’ve paid into the system so far and what your estimated benefits will be when you retire. Each statement also shows your complete earnings history, according to the Social Security Administration's computer records.

Take a few minutes to go over the numbers that you receive and check them for errors. Your benefits will be based on those numbers, so if your earnings are underreported, your benefits will be reduced.

If you have misplaced your statement, want an updated one, or wish to correct an error, call the Social Security Administration at 800-772-1213, or visit www.ssa.gov

Women and Social Security

Social Security was never meant to provide a comfortable retirement in itself; it was intended to supplement other resources. But for women, who in the past have had limited access to other resources, it has often been the cornerstone of retirement.

  • For 77% of unmarried women who are in retirement, social security represents more than half of all income. For 29% of unmarried women retirees, it is the only source of income.
  • For the typical woman of retirement age, social security accounts for 53% of income, compared with just 38% of income for the typical man in retirement.

If you're married, you qualify for benefits even if you don't work. If you've never worked at a paid job, you're entitled to receive 50% of your husband's social security benefit (he gets 100% of his benefit, and you get 50% of that amount). If you also qualify for benefits on the basis of your own work record, you'll receive either 50% of his or 100% of your own, whichever is greater.

You can even qualify for benefits if you are widowed or divorced—and if you are widowed and have unmarried children under 18, they can qualify for survivor's benefits, too.

 

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