The Social Security program has expanded beyond retirement benefits to disability income, insurance for surviving spouses and children and Medicare. 54 million Americans receive some benefit from the Social Security program.

Benefits are wage driven. Currently 6.2% for Social Security are deducted from wages up to an income threshold, while Medicare deducts 1.45% against all wages. The wage earner must work 40 quarters and not necessarily consecutive quarters to qualify for benefits. The benefits calculation is based on the average of the 35 highest years of earnings. The are three basic entry levels into the program: early retirement with reduced benefits (generally age 62), full retirement age (currently at 65 or 66 (depending upon your birth date) and delayed retirement credits at age 70.

Syndicated financial columnist and talk show host Steve Savant interviews author, platform speaker and PBS television media guest Tom Hegna, CLU, ChFC, CASL. This is episode 2 of 5 in the series, Managing Social Security Benefits, America’s #1 Retirement Plan. Tom’s books: Paychecks & Playchecks, Retirement Income Masters and Don’t Worry, Retire Happy. …(read more)

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Learning Social Security basics can improve your retirement planning – Let’s Get Down to Business

When it comes to retirement planning, many people focus on saving enough money to sustain their lifestyle after they stop working. While having a solid financial plan is crucial, it is also important to understand how social security benefits factor into your overall retirement strategy.

Social Security is a federal program that provides income and support to retirees, disabled individuals, and survivors. Understanding the basics of Social Security can play a key role in optimizing your retirement income and ensuring that you make the most of your benefits.

One of the first steps in learning about Social Security is understanding how your benefit amount is calculated. The benefit is based on your earnings history, specifically the 35 years in which you earned the most. It’s important to have a clear picture of your earnings over the years to ensure that your benefit is accurately calculated.

Another factor to consider is when to start taking your Social Security benefits. You can start receiving benefits as early as age 62, but your benefit amount will be reduced if you do so before reaching your full retirement age (FRA). On the other hand, if you delay taking benefits past your FRA, your benefit amount will increase.

Understanding these important details can help you make informed decisions about when to start taking your benefits, thus maximizing your overall retirement income.

Another aspect of Social Security to consider is the impact of working while receiving benefits. If you choose to work while receiving benefits before reaching your FRA, some of your benefits may be withheld depending on your earnings. However, these withheld benefits are not lost, as they will be factored into your future benefit amount.

Lastly, understanding the potential tax implications of your Social Security benefits is crucial for retirement planning. Depending on your income, a portion of your Social Security benefits may be subject to taxation. Being aware of how your benefits are taxed can help you plan for any potential tax liabilities in retirement.

Overall, learning the basics of Social Security can significantly improve your retirement planning. By having a clear understanding of how your benefits are calculated, when to start taking them, and how they may be impacted by working or taxes, you can optimize your retirement income and make informed decisions that align with your financial goals.

In conclusion, while Social Security is just one piece of the retirement planning puzzle, it is a critical one. Taking the time to educate yourself about Social Security basics can help ensure that you make the most of your benefits and have a solid financial plan in place for your retirement years. So let’s get down to business and start learning about Social Security today. Your future self will thank you for it.