Presented by David Corwin The Social Security Administration estimates that 96% of American workers are covered by Social Security. Many Americans, however, don’t have a full understanding of Social Security and the benefits it provides. For example, many people are not aware that:
- Social Security is currently the largest social insurance program in the U.S., funded through dedicated payroll taxes called Federal Insurance Contributions Act (FICA).
- If they are injured or become ill and cannot work, they may qualify for Social Security disability benefits.
- If they die prior to retirement, certain family members may be eligible for Social Security survivor benefits based on their work and earnings record.
- The Social Security retirement benefit is designed to replace a percentage of earnings at retirement and the amount received will depend primarily on two factors…lifetime earnings history and retirement age.
- Depending on year of birth, taking Social Security retirement benefits early can result in as much as a 30% reduction in the retirement benefit that would be payable at full retirement age.
- On the other hand, deferring Social Security retirement benefits to age 70 can result in as much as a 32% higher retirement benefit as compared to the benefit available at full retirement age.
- A portion of the Social Security retirement benefit may be subject to income tax.
- There are a variety of strategies that can be used to enhance the value of Social Security retirement benefits.
For most people, their monthly Social Security check will form an important part of their retirement income.