For those nearing retirement age, collecting social security benefits is usually their main plan for their post work life. Nearly all American workers are covered by some sort of Social Security plan, and most are counting on receiving these benefits in order to survive post retirement. However, the recent economic troubles, as well as the pending wave of Baby Boomer retirements, has called into question the solvency of Social Security and has caused many to worry about the security of their retirement plans. Read on to learn about how Social Security works, and whether you can count on receiving Social Security benefits after you have reached retirement age.
What Makes Social Security Work?
If you’ve ever received a paycheck, then you’ve probably noticed the tax deductions that come out every month. Part of these deductions are the taxes that you pay into Social Security in order to receive benefits once you retire. Once you’re eligible to receive Social Security benefits, the amount you receive will be determined by three different factors:
- How many years you worked at jobs eligible for Social Security
- Your career earnings at those jobs
- At what age you decide to retire. The more money you make in your career, the larger your benefit amounts.
However, even when you’re eligible to collect your benefits, you still have to apply to begin receiving a monthly Social Security payment.
When Do Your Get Your Benefits?
The collection of Social Security is based on earning credits that can be used towards your benefits. The longer you work, the more credits you accumulate and the higher your payments will be. Additionally, the amount of credits you need in order to collect benefits is entirely based on the year of your birth. Forty credits, for example, is equivalent to ten years of work, and is the lowest amount of credits needed for those born after 1929 to collect benefits.
You can keep track of the credits you’ve earned through the Social Security Administration (SSA). Once you’ve earned enough credits, you can submit an application with the SSA to be approved for starting to collect your benefits.
Is Social Security at Risk of Collapsing?
The factor that made Social Security work for so many years was based on how there were more workers paying into Social Security than there were people collecting benefits, leading to a massive surplus. However, thanks to the pending retirement of millions of Baby Boomers, for the first time in the program’s history there will be more benefit collectors than there will be those paying in. While this will be sustainable in the short term, it will eventually lead to the draining of the surplus, and could cause lower payments—or no payments—for retirees. For the moment, however, Social Security is still running smoothly, meaning people planning on retiring in the near future can expect to receive their full benefits.
How Will a Social Security Crisis Affect Young Workers?
Young workers—those between 25 and 35—should at least be moderately concerned about the prospect of receiving their full benefits. Should the Social Security trust fund deplete in the manner that is forecasted over the next two to three decades, current workers may see as much as a 25 percent reduction in their expected benefits, which may seriously damage the future retirement prospects of the modern worker. In short, those working now should not count on Social Security benefits to fund their retirement, and need to plan accordingly with the help of a professional.
Plan for Your Retirement without Social Security Benefits
When you can’t be guaranteed that you’ll receive the Social Security benefits that you’ve been counting on, you need professional assistance to come up with another retirement plan. To develop a strategy to retire without the help of Social Security benefits, you need the guidance of a knowledgeable attorney like the ones you’ll find at the Law Offices of Dr. Bill LaTour, Attorney at Law.
Our attorneys have the experience needed not only to help you navigate the complex Social Security system, but also to help you plan for a retirement void of a monthly Social Security payment. Contact us today to find out how we can help you plan a safe, comfortable and well-funded retirement.