We all pay taxes into the Social Security system, and we all expect to claim our benefits someday. And yet, despite widespread use of the program, most people really don't know much about it! If you have concerns about the Social Security program, read on for answers to the most common questions.
Will Social Security even be around when I retire?You've probably heard the dire news reports about the Social Security fund “running out of money”. Every election season, politicians fiercely debate the different methods of fixing the “broken” public program. And yet, that information is not entirely accurate. Yes, there is a budget shortfall within the system, and it will begin to impact Social Security recipients by about 2035. At that point, Social Security will not disappear entirely, but benefits may be reduced by about one third of originally scheduled amounts.
Of course, that's all assuming that we don't find a way to fix the shortfall. Considering the fact that politicians will have a large number of angry voters on their hands if they don't fix it, there is an excellent chance that the Social Security shortfall scenario will never see the light of day. We have about twenty years to correct the problem!
When can I file for benefits? Many people are confused about when they can claim their Social Security benefits. According to the Administration, your full retirement age is based upon your year of birth, and will fall between ages 65 and 67. If you wait until full retirement age to claim your benefits, you will receive your full scheduled amount. However, you can also file for benefits as early as age 62, if you don't mind receiving a smaller check. Or, you can wait a few extra years and earn a larger monthly benefit.
What will happen to my benefits if I decide to work in retirement? You may have heard that if you work while claiming Social Security benefits, your benefits can be taxed. This is only the case if you decide to retire earlier than your full retirement age. In that case, your monthly check will be reduced according to a complex formula. However, you will earn an increased payment when you reach full retirement age.
Once you reach full retirement age, you can work and earn as much as you want, without your benefits being taxed as a result.
This information has been provided by a Licensed Insurance Professional and is not sponsored or endorsed by the Social Security Administration or any government agency.
Carstens Financial Group focuses on providing comprehensive asset management, estate planning and life insurance solutions. Allow us to help you secure your financial future.