7/20/2012 7:51 PM ET|
What you'll get in Social Security
Whether you’re years or decades away from retirement, here’s what you need to know about what you can expect from Social Security. Plus, tools to plan ahead.
Despite what you've heard, Social Security isn't going to disappear.
Many younger people, and even some older ones, are convinced the retirement system's coffers will run dry before they get a chance to claim benefits.
The reality is quite different. Even if Congress does nothing to fix the troubled system, and its trust fund is exhausted in about two decades, Social Security will still collect enough in payroll taxes to pay out 75% of promised benefits at that point.
Seventy-five percent isn't ideal, but it's sure better than nothing.
The system has other problems. The surplus that Social Security has built up over the years is invested in $2.7 trillion of special Treasury bonds. As payouts exceed tax revenue, Social Security will have to start cashing in those securities. The federal government will have to find the money to make good on the bonds, and that's going to put more pressure on the federal budget.
Even if you can imagine the United States defaulting on its debts -- and few experts believe we're at risk of a Greek-style crisis -- the fact remains that Social Security collects enough in taxes from current workers to pay most of the benefits it has promised.
There are a number of ways to fix Social Security so it could pay everything it has promised. One way would be to raise payroll taxes by 0.9% on both workers and employers. Another would be a series of smaller changes, which were recommended by a bipartisan Debt Reduction Task Force, including gradually increasing the full retirement age, slowing cost-of-living increases, slightly reducing benefits for top wage earners, boosting the amount of earnings subject to the payroll tax and bringing some newly hired state and local government workers into the system.
Creating private investment accounts, as some have suggested, wouldn't resolve the funding gap. What it would do is change the nature of the Social Security program, which was conceived as an insurance program, not an investment scheme. For those of us without traditional pensions, Social Security is the one part of our retirement income that we can't outlive or lose in the stock market.
To see what the Social Security system has promised you, you'll probably need to go online. Social Security used to send annual statements to every worker that included that person's earnings record over the years as well as how much he or she was estimated to receive in retirement. The system suspended the mailings to save money but has since resumed sending statements to workers 60 and older who haven't yet started to receive benefits.
Everybody else needs to:
Go here and create an account. The Social Security Administration uses Experian credit bureau data to help verify your identity, so in addition to your name, address, birth date and Social Security number, you'll need to answer some multiple-choice questions about data included in your Experian credit report. (If you've ever gotten your free credit reports online through AnnualCreditReport.com, you'll be familiar with the type of questions asked.)
Explore your benefits. Once you've created your account, you'll see your promised benefit at "full retirement age." That age, which used to be 65, has been inching up. This year, it's 66. It will rise to 67 for those born after 1959.
You can click on the "estimated benefits" link to get a fuller picture. The next tab will show you how much you can earn if you delay retirement to age 70; your benefit will rise 8% each year you delay. You can also see the lower amount you're scheduled to get if you retire early, at age 62. (More on that in a minute.)
Social Security is more than just a retirement system, of course. You also can see what monthly benefit you'd get if you were severely disabled and couldn't work. Further down, you'll find what your spouse and children would receive if you died.
If you're married, compare your estimates with your spouse's. The lower-earning spouse is entitled to up to half the higher-earning spouse's retirement benefit, if it's greater than his or her own -- something known as spousal benefits. If, for example, your wife would be entitled to $2,000 at full retirement age and your own check would be $750, you could opt to take half of her benefit ($1,000) instead. That would make your household benefit $3,000, rather than the $2,750 you two would get based on your own earnings records. Your spousal benefit would be reduced permanently if you applied before your own full retirement age, however.
The higher-earning spouse must have applied for benefits before the other can claim spousal benefits, but the higher earner has the option to "file and suspend" -- file for benefits, so his or her spouse can claim spousal benefits, and then suspend the application so that his or her own benefits can continue to grow.
If you're divorced, you probably won't be able to compare estimates with your ex. But if the marriage lasted at least 10 years, you should be able to qualify for spousal benefits based on your ex's record if you aren't remarried by the time you reach retirement age. Your ex needn't have started benefits for you to get a spousal check, but he or she would need to be old enough to qualify for retirement benefits (at least 62). You can read more about divorced spouse's benefits here.
AARP has a free calculator that can help you determine the best time to file for benefits. If you want to fiddle with the numbers and assumptions a bit more, for $40 you can try the Maximize My Social Security calculator, created by economics professor and author Laurence J. Kotlikoff.
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it has NOTHING to do with inept government
it has EVERYTHING to do with people making over $106,000 not having to pay in
if the system was fairly administered ,social security would run a huge surplus.......
so quit listening to idiot know nothing conservatives about it being the government's fault...
it's the rich conservatives controling congress so they don't have to pay ss tax on anything over $106,000..............it should surprise nobody that they do this at the expense of the
middle class because that's the nature of free market capitalism
please educate the folks that social security will be good as far as can be projected
with only one change............a change that will never happen.............a very simple fix............
currently NO taxes are collected after $106,000 in wages.....so why is that?
because the very guys making 18 million per year and only paying ssa tax on 106,000 are
the same scum that are controling congress
some math: one 18 million dollar ceo paying his fair share and his employer paying his share would
provide yearly benefits for more than 120 retirees
SO IF EVERYONE PAID THEIR FAIR SHARE WHAT WE WOULD WE DO WITH THE SURPLUS?
CMON LIZ BE USEFUL.............WRITE ABOUT THIS FACT EVERYDAY.........EDUCATE
Maybe if you had to pay Social Security on your entire income.....ah.....just a dream!
Sorry but your statement doesn't hold water. I don't have "free life insurance" being married because my spouse has retired. In addition, my parents have nothing left to will to their children. I certainly follow the "news" (when someone actually print some) concerning SS so I'm not "uninformed." The system is broken and needs to be fixed. I sat in a SS office with my mother and saw who was collecting. It wasn't just the disabled or elderly. I also heard the conversations with those collecting and know that all I need is a doctor's note to be considered disabled. I'm not saying all people are lazy, just the few who are milking the system. As I said before, let me decide how I want to invest in my retirement. SS should be voluntary not mandatory. If I don't collect when I hit 62-70, then it will be my fault.
Its just a ponzie scheme .Any one else pulling this would be jailed and put to be shame .Where can you start to fix this ? Their has been crouption for years in our fed. goverment . Who can really fix this , well thats a 14 trillon dallar question . I thought we start by making the people in office give up 25 percent of their wage and benny's yes that is a start . Then fire all the others and start with new lowered paid ones and let them know that we wont put up with this any longer. Vote folks and then keep an eye on them . They are keeping an eye on you and your monies.They are after it all ! Till you can not make it as a normal human being but as a self employed- goverment employee giving them 75 percent of your gross.And it starts with the wealthy then the middle class and the lower class then the very poor. we cannot stand another four years of free give aways. Stop the madness before this country is Broke .
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Working W. I believe that means woman. Suck it up and deal with it. No one cares about your whinnying.
We work and pay into social security all our lives. Now the goverment says we may not get what we thought upon retirement. Why? They have given OUR money away. It's time we put our foot down.
The goverment gives billions of OUR dollars away every year in so called foreign aid. OUR MONEY!!! Who gets it? What do they do with it? What do they do for it? It's OUR MONEY and we need it. The time has come for us to take care of US.
Working W. I believe that means woman. Suck it up and deal with it. No one cares about your whinnying.
The system is corrupt. As Americans, we are forced to pay into the system from the first legit paycheck you receive. The annual statement is a lie because you will not get back the money you put into it. If you make a somewhat decent salary, you are penalized by having you benefits reduced. Too bad if you retire but your spouse is still working. The amount you will receive will be affected by that person's salary. Tell you what, just give me back the money I put into the system. I can work out my own retirement. The only persons who should receive SS benefits are those who put into the system, the elderly who cannot support themselves, and the handicapped who would never be able to support themselves. There are way too many young people receiving SS benefits. The jobs are out there, you just have to lower your "standards" and take them. I took a major pay cut when I had to take another job, but at least I am working. I am so tired of carrying the weight of the lazy.
The politions borrow from your s/s and never repay it and this is why it is falling short==the republicans did the same but did try to put it back==some==but the present party has done nothing good for s/s for they want it to fail
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