When you retire, Social Security may provide you with a source of income.
The Social Security Administration is a federal government-led organization that administers a variety of benefits to Americans. When people refer to Social Security, they are often talking about the federal pension program that uses taxes to provide a trust fund for eligible individuals.
If you are approaching retirement, or you will be eligible for Social Security for other reasons, here is what you need to know.
What is Social Security?
Social Security is a federal program that provides benefits to older individuals, people with disabilities, and the children of deceased veterans. The program is designed to reach nearly every family in America in some way or another, and it helps millions every year.
A majority of Social Security beneficiaries are retirees and their families. That portion of Social Security beneficiaries equals approximately 49 million people. Though, Social Security isn’t meant to be the only source of income for American retirees. You should plan ahead by creating other retirement income streams before you finish working.
Who Qualifies For Social Security?
When you work, you pay taxes, and those taxes are used to pay for benefits that go to:
- People who have already retired
- Disabled people
- Survivors of workers who died
- Dependents of Social Security beneficiaries
All of the money paid in Social Security taxes goes directly into the Social Security trust fund, rather than any personal account. The fund is for more than just retirement, as there are many categories of people who qualify to receive benefits.
Here is a more specific list of who qualifies for Social Security benefits:
- A spouse or child of someone getting benefits.
- A divorced spouse of someone getting or eligible for
- Social Security.
- A spouse or child of a worker who died.
- A divorced spouse of a worker who died.
- A dependent parent of a worker who died.
Social Security Benefits
Social Security benefits are administered in the form of a monthly check. When you decide to access your benefits will determine how much your benefit is. The longer you wait, the higher your benefit will be, until you reach full retirement age or age 70.
If you choose to delay receiving your benefits beyond full retirement age, your benefit may be increased by a certain percentage. The amount of the increase will be determined based on your year of birth, and the increase will be added automatically for each month from the time you reach full retirement age, start taking benefits, or turn age 70.
Keep in mind that you can start receiving Social Security benefits as early as age 62. Whether this is the right choice for you depends on your specific life circumstances. People who choose this route receive less money in their monthly benefit, but they have access to Social Security benefits for much longer.
Though, if you sign up at age 62, you only receive approximately 70 percent of the full benefit. If the exchange seems worthwhile, go for it, but we suggest speaking to a financial professional before making any decision.
Get Help Planning For Retirement
If you will be eligible for Social Security soon, you will need to decide whether or not to sign up for Social Security benefits immediately. If you aren’t sure what to do, and you could use guidance, please reach out to Avina Financial Group. One of our talented agents would be glad to help you navigate the retirement planning world.