The Facts To Know About Social Security In The United States
The Great Depression took place nearly one-hundred years ago and yet we still talk about it as a major defining piece of American history.
This is not only because of the very serious impact that the Depression had on a lot of people from that time period, but also because of the social programs that resulted from that event.
The people who suffered through the Great Depression never wanted to have to experience something like that again. At least, they did not want others to have to face the full brunt of the worst of the Depression as they once had to.
The Program Is Born
US Social Security was born in the years following the Depression. To be exact, the Social Security Act was signed by President Roosevelt on August 14, 1935. It was established on the idea that people should have some kind of government backstop that they could rely on to help them in retirement. They work hard and contribute to the system for their whole life so that they may one day receive benefits from the government when they are no longer able to work.
The people who are working today fund the Social Security payouts of those who have worked before them. This system continues to run effectively generation after generation. It is not as though a person should rely just on the government to plan their retirement for them, but they can rest a little easier knowing that they have that in their back pocket.
How Much Social Security Will I Get?
Dollars and cents are what matter to most people in any discussion of Social Security. The figure on those checks determines what kind of life a person will be able to live month to month in retirement. It is important to most that they have a check that is big enough to maintain a certain standard of living.
Knowing how much you will receive in Social Security payments is a great way to rest a little easier about how your retirement might play out. That is why so many people look at US Social Security and how the math is calculated.
The Social Security Administration reports that they pay out people based on a formula that has to do with how much they have earned over the years to begin with. This matters because the more a person pays into the system, the more they can expect to draw out of it at a later date. The Administration looks at an average of the highest earning thirty-five years of a person’s working life. They then take that information and use a formula to calculate what your monthly benefit will be when you hit full retirement age at sixty-five.
The thirty-five year highest earning average is a way to try to smooth out one’s earnings over time. There could be years in which a person earns an unusually high or low salary. Instead of just calculating from all of the salaries that a person has ever earned, the Social Security Administration only looks at those that are from the highest thirty-five earning years.
Getting Eligible For Benefits
There are certain requirements that one must reach before they can start to draw their checks. US Social Security eligibility is not all that difficult for those who have worked most of their lives. One needs only to have worked a sufficient number of years to have paid their dues so to speak into the system. As long as they have done that, they will be able to get the entitlement that they have earned.
US Social Security eligibility also has to do with the age of the person who wishes to draw (discussed more in a moment). A person will have had to reach a certain age before they can start to get their money from the government.
You are probably asking yourself at this point “when can I draw Social Security?”. We would all like to get our little slice of the pie that we have paid into. It is frustrating to some to see that little bit of money leave their paycheck every pay period and get nothing for it. Therefore, it is reasonable to ask “when can I draw Social Security?”.
The answer to the question depends on how patient you want to be. The longer that you wait to draw, the more of a benefit you will receive. The earliest that a person is eligible to draw their Social Security benefits is at age sixty-two. However, those would be just reduced benefit amounts. It is not until age sixty-seven that a person would receive the full amount that they are entitled to. Wait a little longer and you can receive a premium rate on your payouts. The longest a person can wait until is their seventieth birthday.
There are very specific structures in place that dictate how much a person will receive in benefits at various ages. The Social Security Administration has the option to tweak these as times goes on so long as Congress passes a law or laws to allow them to do so. There has been much debate about moving the age at which a person can receive benefits up in order to allow the program to run longer and for more people.
Currently the system looks a little like this:
- Age 62 Benefit Received: 70%
- Age 63 Benefit Received: 75%
- Age 64 Benefit Received: 80%
- Age 65 Benefit Received: 86.7%
- Age 66 Benefit Received: 93.9%
- Age 67 Benefit Received: 100%
Everyone has to determine for themselves where the right age on that scale is for them. It is tempting to wait it out until one reaches sixty-seven before drawing benefits, but health and other concerns can certainly be a big factor in this decision. It is hard to give up such a large amount of money that one has put into the system, but sometimes that is the best decision for the person who has done it.
Will Social Security Last?
The sixty-four thousand dollar question is will Social Security last in the long run. The answer is that no one knows for sure. As the program stands today, it is in pretty good shape, but that could change. There are plenty who are already sharing their concerns that it is not stable enough to hold up in the long run.
Those who worry about Social Security lasting often point to the fact that there are so many people entering retirement age right now. There have to be enough workers to collect the taxes necessary to pay for the Social Security payouts of the generation that has already started to receive benefits. It is only possible to have that if economic conditions remain stable and people have enough children to sustain the system.
No one should count singularly on a government program like this for their entire retirement financing. Instead, they ought to consider planning ahead and saving the money they require to live the kind of retired life that they have always dreamed of. That is the only way to rest easy at night about this particular issue.