Have you heard your grandparents talk about looking forward to the beginning of the month when they get their Social Security payment? What is Social Security, and what does it have to do with a retirement plan?
Many people rely solely on Social Security for their retirement plan. Click the questions below to learn more about the Social Security program and how it will affect you in retirement; then answer the question at the bottom of the page.
Social Security is a program run by the federal government that provides benefits to people who are eligible. |
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Anyone who works has Social Security taxes taken out of their pay, and employers must pay Social Security taxes as well. If you work, 6.2% of your pay is deducted for Social Security taxes. These taxes are then placed into a fund that pays out benefits later to those who qualify. |
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Those who qualify for benefits are people who are retired, people with disabilities, and surviving spouses and children of workers who have died. To be eligible for retirement benefits, you must have worked a minimum of 10 years during your lifetime. Social Security mails out a summary of your benefits each year, which includes a record of your earnings history and an estimate of the retirement benefits available to you. |
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The earliest you can begin to receive Social Security retirement benefits is age 62, and those would be partial payments. You can receive the full retirement payout that you've earned by waiting until you reach full retirement age. Currently that age is 67 for everyone born in 1960 or after. If you wait to collect Social Security until your full retirement age, your monthly payment is more. For every year after full retirement age that you delay collecting payments, your benefits payment goes up 8 percent, until you turn 70, which is the longest you can delay. |
Kathy is nearing retirement age and is trying to decide when she should collect Social Security benefits. What factors should she consider?
Kathy can collect Social Security as early as age 62, but it is better to wait until her full retirement age so that she will get her full retirement pay.
