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Mind, & Spirit","hasSubCategories":true,"url":"/category/articles/body-mind-spirit-34038"},{"categoryId":34224,"title":"Business, Careers, & Money","hasSubCategories":true,"url":"/category/articles/business-careers-money-34224"}],"breadcrumbs":[],"categoryTitle":"Level 0 Category","mainCategoryUrl":"/category/articles/level-0-category-0"}}},"navigationCategoriesLoadedStatus":"success"},"searchState":{"searchList":[],"searchStatus":"initial","relatedArticlesList":{"term":"143703","count":5,"total":380,"topCategory":0,"items":[{"objectType":"article","id":143703,"data":{"title":"How to Estimate How Much Social Security You’ll Get Each Month","slug":"how-to-estimate-how-much-social-security-youll-get-each-month","update_time":"2022-07-19T18:26:51+00:00","object_type":"article","image":null,"breadcrumbs":[{"name":"Business, Careers, & Money","slug":"business-careers-money","categoryId":34224},{"name":"Personal Finance","slug":"personal-finance","categoryId":34273},{"name":"Social Security","slug":"social-security","categoryId":34309}],"description":"Copyright © 2015 AARP\r\n\r\nAfter you figure out your full retirement age, you can get a ballpark idea of your monthly benefit. Currently, the average retirement benefit is about $1,328 per month (in January 2015), but benefits go much higher, depending on your earnings history and when you begin collecting.\r\nIt’s easy to get at least a rough estimate of your retirement benefits. Just use one of the SSA’s online calculators — the Social Security Quick Calculator or the Retirement Estimator. The Retirement Estimator is especially useful, because it also gives you projected amounts for retiring early at 62, waiting for the full retirement age, or delaying all the way until 70. (You also can get estimates customized to your personal situation by using AARP’s Social Security Benefits Calculator.)\r\nIf you use the SSA’s Retirement Estimator, you’ll see roughly how much Social Security you could get, especially if your earnings don’t skyrocket or crash between now and the time you retire. If you haven’t yet done so, you can use the Retirement Estimator as a starting point to think about how much money you can count on in retirement.\r\nWhether the Social Security numbers look small, large, or in between, remember that Social Security is meant to be just one part of your financial foundation.\r\nYou stand to get much more money if you can delay collecting Social Security past your full retirement age. For example, if you were born between 1943 and 1954, your Social Security payment at 62 is 25percent lower than if you wait until 66 (your full retirement age). If you hold off to age 70 — four years past your full retirement age — the benefit balloons by 32 percent.\r\n\r\nThese differences can add up to real money over the years — or decades. Consider the following example:\r\n\r\nElisa was born in 1953 and wants to know how she would be affected by choosing different dates to retire. She goes to the Retirement Estimator tool and quickly types in some basic information, including her name, Social Security number, state of birth, and mother’s maiden name. She also plugs in the $160,000 she earned last year. The Retirement Estimator lists the estimated payments she would get for retiring at three different ages.\r\n\r\nIf Elisa waits until her full retirement age of 66, she’ll get about $2,615 per month. If she waits until 70 to collect benefits, she’ll get about $3,512 per month. And if she wants to start as soon as possible, at 62, she’ll get a more modest $1,930 per month.\r\n\r\nElisa knows that longevity runs in her family, so she wants to find out how much she’ll collect from Social Security if she lives to 90. To get the answer, she calculates the number of months she would receive benefits in three different cases — starting at 62 (336 months), starting at 66 (288 months), and starting at 70 (240 months). Then she multiplies the number of months by the estimated benefit provided by the online tool.\r\n\r\nIf Elisa starts the benefit at 62 and lives to 90, she could end up with more than $648,000 over her lifetime, not even counting increases for inflation (336 months between 62 and 90, multiplied by the estimated benefit of $1,930 per month for benefits starting at 62). If she starts at 66, her lifetime collection would exceed $753,000. And if she starts the benefit at 70, she ends up with more than $842,880. The difference between starting benefits at 62 and at 70 comes to $194,400 for Elisa.\r\n\r\nYour decision on when to begin retirement benefits makes a real difference in your monthly income. The numbers here are based on a retirement age of 66 and a monthly benefit of $1,000. They may differ based on your year of birth and other factors.\r\n\r\n\r\n\r\nCredit: Source: Social Security Administration\r\n\r\nWaiting to take retirement benefits beyond your full retirement age could prove especially important for Baby Boomers and, right behind them on the age ladder, members of Generation X. For people born in 1943 or later, the retirement benefit expands at a rate of 8 percent per year (or 2⁄3 of 1 percent per month) for each year you delay claiming (up to age 70) after reaching full retirement age.\r\n\r\n\r\n\r\n\r\nYear of Birth\r\nYearly Rate of Increase\r\nMonthly Rate of Increase\r\n\r\n\r\n1933–1934\r\n5.5 percent\r\n11⁄24 of 1%\r\n\r\n\r\n1935–1936\r\n6.0 percent\r\n1⁄2 of 1%\r\n\r\n\r\n1937–1938\r\n6.5 percent\r\n13⁄24 of 1%\r\n\r\n\r\n1939–1940\r\n7.0 percent\r\n7⁄12 of 1%\r\n\r\n\r\n1941–1942\r\n7.5 percent\r\n5⁄8 of 1%\r\n\r\n\r\n1943 or later\r\n8.0 percent\r\n2⁄3 of 1%\r\n\r\n\r\n\r\nIf you were born on January 1, refer to the previous year.","item_vector":null},"titleHighlight":null,"descriptionHighlights":null,"headers":null},{"objectType":"article","id":175720,"data":{"title":"Who Qualifies for Social Security Retirement Benefits?","slug":"who-qualifies-for-social-security-retirement-benefits","update_time":"2016-03-26T17:39:05+00:00","object_type":"article","image":null,"breadcrumbs":[{"name":"Business, Careers, & Money","slug":"business-careers-money","categoryId":34224},{"name":"Personal Finance","slug":"personal-finance","categoryId":34273},{"name":"Social Security","slug":"social-security","categoryId":34309}],"description":"Copyright © 2012 AARP. All rights reserved.\nSocial Security retirement benefits were created to help older Americans live in dignity and independence after a lifetime of work. To qualify for these benefits, you have to meet certain earnings requirements. The good news is that these requirements are in relatively easy reach for most healthy people who’ve worked for a number of years.\nHow you qualify for Social Security\nUnder the rules, you get credits toward eligibility by earning certain amounts of money. Most workers pick up the necessary credits without even thinking about it. Generally, 40 credits — which you can pick up in ten years of covered employment — does the trick. Covered employment means a job in which you and your employer pay Social Security taxes. (If you’re in business for yourself, you have to pay both the employer and employee shares.) These days, almost all jobs are covered.\nPeople born before 1929 need fewer than 40 credits to qualify.\nIn 2012, Social Security awarded you one credit for every $1,130 in earnings, and you could get up to a maximum of four credits per year. (The dollar amount typically rises each year to reflect growth in wages.) For example, say you earned $4,520 in 2012. That means you earned a total of four credits ($1,130 x 4 = $4,520). Now, say you earned $100,000 in 2012. You still earned a total of four credits, because four credits is the yearly maximum no matter how much money you make.\nRetirees become eligible for benefits on the first full month after their 62nd birthday — so if you turn 62 on July 19, you become eligible for benefits on August 1. The August payment would arrive in September, however, because Social Security pays with a one-month delay.\nYou don’t have to take your benefit when you turn 62. The longer you wait, the higher your monthly payment will be, until you reach 70. At that point, there’s no payoff in further delay.\nWho can receive Social Security\nIf you qualify for retirement benefits, Social Security also may provide benefits to other family members under certain conditions, without reducing the benefits that go to you. Eligible dependents may include\n\n\nA spouse age 62 or older.\n\n\nA spouse of any age who cares for your dependent child who is younger than 16 or disabled.\nThe SSA tends to follow state guidelines in terms of recognizing common-law marriages, although the rules leave some wiggle room for interpretation. As of 2012, the SSA does not give spousal benefits to partners in same-sex unions.\n\n\nYour children.\nTo qualify, children must fall into one of the following categories:\n\n\nYounger than 18 and unmarried\n\n\nFull-time students up to age 19 who haven’t yet completed high school and are unmarried\n\n\nAge 18 or older and severely disabled with a disability that began before age 22\n\n\n\n\nGrandchildren.\nIf your grandchild depends on you financially, and the grandchild’s parents provide no support (for example, due to death or disability), the grandchild may qualify for Social Security benefits on your work record.\n\n\nA former spouse(s).\nYour ex(es) may get benefits if the following apply:\n\n\nYou were married for at least 10 years.\n\n\nYou’ve been divorced for at least 2 years.\n\n\nHe or she is 62 or older, has not remarried, and is not eligible for a bigger benefit on anyone else’s work record.\n\n\n\n","item_vector":null},"titleHighlight":null,"descriptionHighlights":null,"headers":null},{"objectType":"article","id":254450,"data":{"title":"How the Federal Government Defines Full Retirement Age","slug":"federal-government-defines-full-retirement-age","update_time":"2018-07-25T21:22:31+00:00","object_type":"article","image":null,"breadcrumbs":[{"name":"Technology","slug":"technology","categoryId":33512},{"name":"Computers","slug":"computers","categoryId":33513},{"name":"Macs","slug":"macs","categoryId":33520},{"name":"General Macs","slug":"general-macs","categoryId":33523}],"description":"The federal government has set the benchmark for retirement benefits, called full retirement age (FRA), or normal retirement age. If you begin retirement benefits at this age, you receive full retirement benefits (FRB), also known as normal retirement benefits. Begin benefits earlier, and you receive lower monthly benefits. Delay receiving benefits after FRA, and you receive a higher annual payment.\r\n\r\nFor many decades, FRA was 65. The reforms of 1983 phased in a higher FRA for anyone born after 1937 (anyone who turns 65 after 2002). When fully phased in, the schedule creates a new FRA of 67 for anyone born after 1959. Check out the following table for a schedule of FRAs to see where you fall.\r\n\r\nAge to Receive Full Social Security Benefits\r\n\r\n\r\n\r\nYear of Birth\r\nFull Retirement Age (FRA)\r\n\r\n\r\n\r\n\r\n1937 or earlier\r\n65\r\n\r\n\r\n1938\r\n65 and 2 months\r\n\r\n\r\n1939\r\n65 and 4 months\r\n\r\n\r\n1940\r\n65 and 6 months\r\n\r\n\r\n1941\r\n65 and 8 months\r\n\r\n\r\n1942\r\n65 and 10 months\r\n\r\n\r\n1943–1954\r\n66\r\n\r\n\r\n1955\r\n66 and 2 months\r\n\r\n\r\n1956\r\n66 and 4 months\r\n\r\n\r\n1957\r\n66 and 6 months\r\n\r\n\r\n1958\r\n66 and 8 months\r\n\r\n\r\n1959\r\n66 and 10 months\r\n\r\n\r\n1960 and later\r\n67\r\n\r\n\r\n\r\nNote: If you were born on January 1 of any year, you should refer to the previous year. If you qualify for benefits as a survivor, your full retirement age may be different.\r\n\r\nAn annual limit exists on the amount of retirement benefits, regardless of preretirement income. The limit is indexed for inflation. So, for example, someone retiring at full retirement age in 2017 received no more than $2,687 monthly regardless of how high her lifetime earnings were. Someone retiring at age 70 in 2017 had a maximum monthly benefit of $3,538. (For comparison, the average monthly retirement benefit paid in 2009 was $1,328.)\r\nYou can begin receiving Social Security retirement benefits as early as age 62, and you don’t have to be retired from work to receive them. You can choose the starting date. However, note that if you begin the benefits before FRA, the amount of benefits will be reduced below the FRB. The benefit is reduced by a percentage for each month you begin benefits before FRA. The amount of the reduction depends on the year of your birth. The reduction in benefits for early retirement is a little complicated. The beneficiary loses a percentage of the full benefit for each month of the first 36 months before FRA, and a percentage of the full benefit for each additional month before FRA that benefits begin. The following table shows the reduced benefit for taking benefits at 62 for each age group.\r\nFull Retirement and Age 62 Benefit by Year of Birth\r\n\r\n\r\n\r\nYear of Birth\r\nFull (Normal) Retirement Age\r\nMonths between Age 62 and Full Retirement Age\r\nA $1,000 Retirement Benefit Would Be Reduced to\r\nThe Retirement Benefit Is Reduced By\r\nA $500 Spouse’s Benefit Would Be Reduced to\r\nThe Spouse’s Benefit Is Reduced By\r\n\r\n\r\n\r\n\r\n\r\n1937 or earlier\r\n65\r\n36\r\n$800\r\n20.00%\r\n$375\r\n25.00%\r\n\r\n\r\n\r\n1938\r\n65 and 2 months\r\n38\r\n$791\r\n20.83%\r\n$370\r\n25.83%\r\n\r\n\r\n1939\r\n65 and 4 months\r\n40\r\n$783\r\n21.67%\r\n$366\r\n26.67%\r\n\r\n\r\n1940\r\n65 and 6 months\r\n42\r\n$775\r\n22.50%\r\n$362\r\n27.50%\r\n\r\n\r\n1941\r\n65 and 8 months\r\n44\r\n$766\r\n23.33%\r\n$358\r\n28.33%\r\n\r\n\r\n1942\r\n65 and 10 months\r\n46\r\n$758\r\n24.17%\r\n$354\r\n29.17\r\n\r\n\r\n1943–1954\r\n66\r\n48\r\n$750\r\n25.00%\r\n$350\r\n30.00\r\n\r\n\r\n1955\r\n66 and 2 months\r\n50\r\n$741\r\n25.83%\r\n$345\r\n30.83%\r\n\r\n\r\n1956\r\n66 and 4 months\r\n52\r\n$733\r\n26.67%\r\n$341\r\n31.67%\r\n\r\n\r\n1957\r\n66 and 6 months\r\n54\r\n$725\r\n27.50%\r\n$337\r\n32.50%\r\n\r\n\r\n1958\r\n66 and 8 months\r\n56\r\n$716\r\n28.33%\r\n$333\r\n33.33%\r\n\r\n\r\n1959\r\n66 and 10 months\r\n58\r\n$708\r\n29.17%\r\n$329\r\n34.17%\r\n\r\n\r\n1960 and later\r\n67\r\n60\r\n$700\r\n30.00%\r\n$325\r\n35.00%\r\n\r\n\r\n\r\nNote: If you were born on January 1, you will be treated as if born the previous year. If you were born on the first of the month, the benefit is figured as if your birthday was in the previous month. You must be at least 62 for the entire month to receive benefits. Percentages are approximate due to rounding. The maximum benefit for the spouse is 50% of the benefit the worker would receive at full retirement age. The % reduction for the spouse should be applied after the automatic 50% reduction. Percentages are approximate due to rounding.\r\n\r\nThe law provides an incentive, known as delayed retirement credits, to delay receiving benefits after FRA. The credits are a rate of increase in your benefits for each month you postpone receiving benefits, and the rate of increase depends on the year you were born. So, your age and the number of months you delay receiving benefits determine how much benefits increase when you wait. A third factor is the salary you receive if you continue to work before receiving benefits. Because your highest 35 years of earnings are used to calculate benefits, working more years may increase your FRB if later higher-earning years push lower-earning years out of the top 35. The following table shows the rate at which FRA increases. There are no increases for delaying benefits past age 70.\r\n\r\nHow Much Will Delayed Retirement Increase My Benefits?\r\n\r\n\r\n\r\nYear of Birth\r\nYearly Rate of Increase\r\nMonthly Rate of Increase\r\n\r\n\r\n\r\n\r\n1930\r\n4.5%\r\nof 1%\r\n\r\n\r\n1931–1932\r\n5.0%\r\nof 1%\r\n\r\n\r\n1933–1934\r\n5.5%\r\nof 1%\r\n\r\n\r\n1935–1936\r\n6%\r\nof 1%\r\n\r\n\r\n1937–1938\r\n6.5%\r\nof 1%\r\n\r\n\r\n1939–1940\r\n7%\r\nof 1%\r\n\r\n\r\n1941–1942\r\n7.5%\r\nof 1%\r\n\r\n\r\n1943 or later\r\n8%\r\nof 1%\r\n\r\n\r\n\r\n ","item_vector":null},"titleHighlight":null,"descriptionHighlights":null,"headers":null},{"objectType":"article","id":248084,"data":{"title":"10 Myths About Social Security","slug":"10-myths-about-social-security","update_time":"2021-03-10T20:48:05+00:00","object_type":"article","image":null,"breadcrumbs":[{"name":"Business, Careers, & Money","slug":"business-careers-money","categoryId":34224},{"name":"Personal Finance","slug":"personal-finance","categoryId":34273},{"name":"Social Security","slug":"social-security","categoryId":34309}],"description":"Copyright © 2020 by AARP. All rights reserved.\r\n\r\nSomething about Social Security stirs the popular imagination. Rumors and phony stories have attached themselves to the program from the start. Sometimes you can identify the grain of truth that sprouts into a tall tale. Other times you can’t.\r\n\r\nBefore Social Security got off the ground in the 1930s, newspapers in the Hearst chain spread the story that people would have to wear dog tags stamped with their Social Security numbers. (The dog tag idea actually was proposed but never approved.) Many people continue to believe that Social Security maintains an individual account with their contributions in it. The reasoning is easy to see, but the story isn’t true.\r\n\r\nRumors swirl about the state of Social Security’s finances, hidden meaning in the numbers, and other topics that find fertile ground on the internet and are spread through social media. Unfortunately, myths can be harmful because they undermine public understanding of Social Security and confidence in the program at a time when the nation needs a constructive, fact-based discussion.\r\nMyth: Social Security Is a Ponzi Scheme\r\nThis is a claim made by critics of the program who really are saying that Social Security is inherently unbalanced and doomed to fail. Their charge is based on a superficial comparison of Social Security with a type of fraud associated with Charles Ponzi, a charismatic con artist in the early 20th century.\r\n\r\n[caption id=\"attachment_274596\" align=\"alignnone\" width=\"556\"] © Amir Ridhwan / Shutterstock.comSocial Security is not a Ponzi scheme.[/caption]\r\n\r\nPonzi’s infamous scheme involved speculation in international postal coupons. He lured his victim investors by promising returns of 50 percent at a time when banks were paying around 5 percent interest. Early investors were paid with money from later investors, a hallmark of Ponzi schemes. Such frauds may work for a little while, but inevitably they collapse. (Just ask Bernie Madoff.)\r\n\r\nThe misleading comparison of Social Security to a Ponzi scheme is based on the fact that Social Security does require one group (workers) to help support another group (retirees and other beneficiaries). This system is sometimes described as a pay-as-you-go system.\r\n\r\nThe Ponzi label falls apart, however, when you think it through. For one thing, Social Security doesn’t rely on a soaring base of contributors, as Ponzi schemes do. Instead, it requires a somewhat predictable relationship between the number of workers and beneficiaries, along with adequate revenues. A lower U.S. birthrate starting in the 1960s and increasing life expectancy that has resulted in an aging of the population are significant causes of Social Security’s expected shortfall.\r\n\r\nSocial Security has other fundamental differences from a Ponzi scheme. Importantly, it’s transparent. Each year, the Social Security Administration (SSA) releases information about its financial state in exhaustive detail, along with projections 75 years into the future, based on different economic assumptions. Scams, by contrast, thrive on secrecy and deception. And unlike a Ponzi scheme, the money not used to pay current benefits has built up a surplus of $2.9 trillion.\r\n\r\nAnother basic difference between Social Security and a Ponzi scheme is in the goals. A crook hatches a Ponzi scheme to get rich at others’ expense. Social Security provides social insurance to protect people. Money goes from one generation to help support another generation. Your tax contributions help support your parents. One day, the contributions of future generations will help support you.\r\nMyth: Your Social Security Number Has a Racial Code in It\r\nThe nine-digit Social Security number has long fascinated people, because it is a unique, personal identifier in a nation that cherishes individuality. One myth is that the number contains a code that identifies the race of the cardholder. According to the myth, the code can be found in the group number, the fourth and fifth digits, in the middle. In one version of the rumor, a person’s race could be determined by whether the fifth digit in the Social Security number is even or odd. (Group numbers range from 01 to 99.)\r\n\r\nOne explanation for this myth is that people have misinterpreted the meaning of the term group number, wrongly assuming that it referred to race. This rumor has caused some people to worry that their Social Security number makes them vulnerable to discrimination by potential employers or others who may spot the racial code in an application.\r\n\r\nAccording to the SSA, however, the term group number refers simply to an old system of numerical grouping that traces back to Social Security’s early days, when everyone’s records were stored in paper files. Employees used the two-digit group number to help organize the files.\r\n\r\nIf you want to find possible meaning in your Social Security number, look to the first three digits — the area number. Before 1972, the first three digits were based on the state where the card was issued; after that, they were based on the mailing address on the application. This is no longer true, however. In 2011, the agency began assigning the first three digits randomly, as part of a strategy to protect people from identify theft.\r\nMyth: Members of Congress Don’t Pay into the System\r\nThis myth gets its strength by combining two rich symbols, Social Security and Congress. Variations of the myth include the idea that lawmakers get a special break on Social Security payroll taxes and that they’re allowed to collect benefits at an earlier age than the rest of us.\r\n\r\nIn the past, Congress and the rest of the federal government were covered under the Civil Service Retirement System, which was created years before Social Security. Under a 1983 law, however, all three branches of the federal government were steered into Social Security. As a result, since 1984, members of Congress, the president, the vice president, federal judges, and most political appointees have been required to pay taxes into the Social Security system like everyone else. And the same rules apply to them as apply to you.\r\nVestiges of the old setup endure for some federal employees. Those hired before January 1984 aren’t required to participate in the Social Security system. All federal employees hired since 1984, however, make Social Security payroll tax contributions like everyone else. That includes lawmakers.\r\n\r\nMyth: Social Security Is Going Broke\r\nPeople have heard so much talk about Social Security’s finances that it’s easy to see why they may think the program is going off the cliff. That’s not the case, however.\r\n\r\nSocial Security can pay full benefits until about 2035 — and it can continue to pay about 80 percent of benefits thereafter, according to the program’s trustees. The gap is caused by the fact that a relatively smaller number of workers will be supporting a relatively higher number of retirees.\r\n\r\nThe large number of Baby Boomers retiring, combined with the smaller number of individuals paying into the system through the payroll tax (because of lower birthrates), has caused Social Security benefits to surpass the amount of payroll taxes coming in. To make up for this shortfall, Social Security will increasingly draw down its trust funds of $2.9 trillion to supplement the revenues that will continue to pour in (primarily through payroll taxes).\r\n\r\nThe funding gap can be closed through a combination of modest tax increases and/or phased-in benefit cuts for future retirees. Although it has been difficult for lawmakers to make a deal, various policy options show that it’s possible.\r\n\r\nAssertions that Social Security is running out of money erode the confidence of younger people, who will need Social Security one day. Polls have shown, for example, that substantial numbers of future beneficiaries — as high as 80 percent — worry Social Security won’t be there for them when they reach old age. This undue pessimism helps reinforce the next myth.\r\nMyth: The Social Security Trust Funds Are Worthless\r\nSocial Security revenues stream into U.S. Treasury accounts known as the Social Security trust funds. One trust fund pays benefits for retirees and survivors; the other pays benefits for people with disabilities. (The revenues come from the payroll tax and some of the income tax paid by higher-income retirees.)\r\n\r\nMost of the trust-fund money is used quickly to pay benefits. But a big surplus has developed over the years — about $2.9 trillion. Under the law, Social Security is required to lend the surplus funds to the federal government, which is then obliged to pay the loan back with interest. This lending takes place through investment in special-issue, medium- and long-term Treasury securities that can always be redeemed at face value.\r\n\r\nThis sanctioned lending, by the way, is the reason you may sometimes hear claims that the government “raids” the Social Security trust funds.\r\n\r\nThose who contend that the trust funds are worthless are really predicting that the federal government won’t make good on that debt — even though the bonds are backed by the full faith and credit of the United States, just like other Treasury bonds held by the public. Investors throughout the world retain confidence in this nation to make good on the debt it owes, as demonstrated by the ongoing demand for U.S. Treasury bonds, even at a time of government deficits and budget battles.\r\n\r\nIn the coming years, Social Security will rely increasingly on income from bond interest and actual bond sales to pay benefits. That means the U.S. government faces a large and growing bill to pay Social Security back for the money it has borrowed over the years.\r\n\r\nThere are no recommendations here on how the government should pay its bills. But if you consider those matters, just remember that Social Security isn’t the cause of the nation’s current deficits.\r\nMyth: You’d Be Better Off Investing in Stocks\r\nYou hear this myth more often during boom times, but for the average person, it’s highly dubious at any time. To be clear: It’s important for people to save as much as they can, and stock investments may be an important element in your savings.\r\n\r\nBut the notion that you’d be better off without Social Security usually doesn’t hold up. For one thing, Social Security and stock investing aren’t substitutes for each other. Unlike stocks, Social Security provides broad protections for you and your loved ones, including benefits for disability, survivors, and dependent family members. These benefits may be payable if tragedy strikes at an early age, before you’ve had the many years needed to build up a nest egg.\r\n\r\nAlso, Social Security shields retirement income from risks that are inherent in the financial markets. Although stock returns may be greater, stocks are more volatile. If a market collapses at the wrong moment, your holdings can be hammered. Social Security, by contrast, provides a guaranteed benefit.\r\nIf you truly want to save for yourself, it helps to consider how much of a nest egg you need to match the protections you get from Social Security. You could buy an annuity to provide monthly income under certain circumstances. But what would it cost? Suppose you were trying to equal the average Social Security retired worker benefit (about $1,500 a month in 2020). You would need hundreds of thousands of dollars to purchase a survivor annuity that matched the benefit, starting at age 66 and protected for inflation. A higher-paying annuity meant to equal Social Security’s family maximum for top earners (more than $4,500 a month) would cost nearly a million dollars. Annuity price tags vary as interest rates change; also, insurance companies charge different amounts, so you can’t find one lasting dollar figure.\r\nNeither of the products described here equals Social Security’s protections. They don’t cover family members while you’re alive, including a spouse or children, nor do they offer child survivor benefits when you die.\r\n\r\nCould you save half a million bucks? Suppose you had 40 years to build up the nest egg. At a 3 percent rate of return, you’d have to set aside about $6,500 per year. Most people don’t save that much. Many people have nothing left over by the time they pay the monthly bills. Of those who do save, many could set aside more. Also, many people take money out of their nest eggs when needs arise. Unfortunately, such withdrawals can do lasting harm. Saving requires long-term discipline and possibly short-term sacrifice.\r\n\r\nAbout one in four adults who have yet to retire report no retirement savings or pension, according to a Federal Reserve study in 2019. While savings do increase with age, millions of older workers lack adequate nest eggs. Imagine how much more insecure your retirement would be if you had to depend completely on yourself to save for retirement. Maybe you could pull it off, but most people are better off with the guarantees of Social Security.\r\nMyth: Undocumented Immigrants Make Illegal Social Security Claims\r\nTales that undocumented immigrants are soaking up Social Security benefits pick up steam periodically. As one popular version has it, Congress is about to consider a bill making benefits legal for workers who are in this country without authorization. This notion makes a lot of people angry. It’s also possible that the myth is spread when people stand in line at a Social Security office and make assumptions about others around them.\r\n\r\nWhatever the cause, the myth isn’t true. Plus, the myth obscures an irony: Undocumented workers actually add revenue to the system through the Social Security taxes that are taken out of their pay, while most never claim benefits.\r\n\r\nUnder the law, undocumented immigrants are prohibited from claiming Social Security, as well as most other federal benefits. (Certain exceptions to this ban are allowed, such as for emergency medical treatment and emergency disaster relief.)\r\n\r\nIn reality, some undocumented workers use fake Social Security numbers to get jobs. Payroll taxes are then deducted from their pay, just as they are from everyone else’s, and credited to the Social Security trust funds. Generally, these workers don’t collect benefits. In fact, SSA estimates that undocumented immigrants contributed $12 billion net — that is, revenue paid into the system over benefits paid out — into the Social Security funds in 2010.\r\nMyth: When Social Security Started, People Didn’t Even Live to 65\r\nThis observation shows how the “facts” can be misleading. Its underlying point — that Social Security was designed to pay little in benefits because people wouldn’t live long enough to collect them — isn’t true.\r\n\r\nBack when Social Security was created, life expectancy was shorter; a high rate of infant mortality meant that many people didn’t reach adulthood, and life expectancy at birth was especially low. (In 1930, it was about age 58 for men and 62 for women.) If you survived childhood, though, you could expect to live many more years. Among men who lived to 21, more than half were expected to reach 65. If you reached 65, your life expectancy came to about 78. (Women lived longer than men, as they still do.) Life expectancy at 65 has increased since the 1930s, to be sure, but much less dramatically than life expectancy at birth.\r\n\r\nThe architects of Social Security knew the program would serve many millions of beneficiaries as time passed. They concluded that age 65 fit with public attitudes and could be financed through an affordable level of payroll taxes.\r\n\r\nThe notion that Social Security was designed to cost little because people died early is simply not true.\r\nMyth: Congress Keeps Pushing Benefits Higher Than Intended\r\nCommentators sometimes assert that, over the years, generous lawmakers have hiked Social Security benefits far beyond the intention of the program’s founders. These heaped-on benefits, the story goes, explain why Social Security faces a future shortfall.\r\n\r\nIt’s true that Congress has enhanced benefits on several occasions since the program’s initial approval in 1935. But such changes were consistent with the intent of Social Security as a social insurance program for all Americans.\r\n\r\nBy the important measure of replacement rates (how much of your pre-retirement income you get back in benefits), Social Security has been stable over the decades. In fact, replacement rates are now declining because of the gradually increasing age for full retirement benefits that Congress approved in 1983.\r\n\r\nWhen Social Security first began, benefits were limited to payments to retirees. The intent of the program, however, was to provide meaningful social insurance for certain risks in life and to extend such protections to dependent family members. Family benefits (including for survivors) were added in 1939, followed later by coverage for disabled workers and their dependents. Automatic annual cost-of-living increases took effect in 1975 to replace the ad hoc approach to inflation adjustments that had been followed previously.\r\n\r\nThe fallacy is that these reforms undermined Social Security’s long-term stability. Studies have shown that the addition of survivor and auxiliary benefits was offset to some degree by slower growth in benefits paid directly to workers. The anticipated shortfall reflects the fact that relatively fewer workers (because of a lower birthrate since the 1960s) will be supporting a bigger population of longer-living retirees in the coming years.\r\nMyth: Older Folks Are Greedy and Don’t Need All of Their Social Security\r\nAs some tell it, most older Americans spend their days being pampered in posh retirement villas or country clubs. According to the stereotype, these misers have no concern for young people — they prefer to take advantage of Social Security benefits they don’t need.\r\n\r\nTalk about myths! Over half of older Americans depend on Social Security for at least 50 percent of their retirement income. The benefits keep more than one-third of older Americans out of poverty, often by a thin margin.\r\n\r\nAre benefits too generous? The average monthly payment for a retired worker is about $1,500 (as of 2020). That’s about $18,000 a year. Not only do many millions of people struggle with poverty and near poverty, but recent estimates paint a bleaker picture than had previously been thought.\r\n\r\nA U.S. Census Bureau alternative poverty measure in 2018 found a 13.6 percent poverty rate among Americans age 65 and up. Without income from Social Security, the poverty rate for older Americans would nearly triple — soaring to nearly 40 percent. Such figures make clear what common sense may tell you: A great many older people rely on Social Security to survive.\r\n\r\nThe myth of greedy seniors is further contradicted by the interdependence of generations, which may be growing. An increasing number of older people are helping to support their adult children and grandchildren, and studies have shown a big rise in the number of interdependent, multigenerational families. A U.S. Census survey found that slightly more than 7 million children — nearly 10 percent of all kids — live in families that include a grandparent.\r\n\r\nSometimes commentators try to argue that retirees and young people are at odds economically, as if older Americans are grabbing benefits they haven’t earned and don’t deserve. Think of the older people you know personally, people in your own family, and ask yourself: Does that ring true?","item_vector":null},"titleHighlight":null,"descriptionHighlights":null,"headers":null},{"objectType":"article","id":143691,"data":{"title":"How Social Security Benefits Are Taxed","slug":"how-social-security-benefits-are-taxed","update_time":"2021-11-05T14:46:34+00:00","object_type":"article","image":null,"breadcrumbs":[{"name":"Business, Careers, & Money","slug":"business-careers-money","categoryId":34224},{"name":"Personal Finance","slug":"personal-finance","categoryId":34273},{"name":"Social Security","slug":"social-security","categoryId":34309}],"description":"Copyright © 2020 AARP.\r\n\r\nA growing number of Americans owe income tax on part of their Social Security benefits. You typically won’t owe income taxes on your benefits if they represent all of your income. But significant income from work, investments or a pension — on top of Social Security — could be an income-tax liability. In addition to the feds, some states — predominately in the Midwest — tax Social Security benefits. (The states have a hodgepodge of tax rules and exclusions for Social Security, so check with your own state tax agency or accountant to figure out whether that applies to you.)\r\n\r\n[caption id=\"attachment_274606\" align=\"alignnone\" width=\"556\"] © Steve Heap / Shutterstock.com[/caption]\r\n\r\nThe state tax agencies go by different names, but you can find contact information for yours at the Federation of Tax Administrators.\r\n\r\nWhatever your income, however, at least 15 percent of your Social Security benefit is protected from the tax collector. No one pays income tax on more than 85 percent of his or her benefits. Importantly, single filers are treated differently than married couples filing a joint return. You can go through a few steps to get a rough idea of how taxation of benefits may affect you:\r\n\r\n 1. Get a rough idea of your provisional income, or what Social Security calls your combined income.\r\nYour provisional income is the sum of wages, interest (taxable and nontaxable), dividends, pensions, self-employment income, other taxable income, and half of your Social Security benefits, less certain deductions you may take when determining your adjusted gross income.\r\n 2. See where your provisional income level fits into the tax rules.\r\nSay you file as an individual, and your combined income is under $25,000. If so, you owe no taxes on your Social Security. If your provisional income level is between $25,000 and $34,000, you may have to pay income tax on up to 50 percent of your benefits. If your combined income is above $34,000, you may have to pay income tax on as much as 85 percent of your Social Security benefit.\r\nFor married couples, the levels are different. If a couple has provisional income of less than $32,000, you’re in the clear. If provisional income comes in between $32,000 and $44,000 on your joint return, you may owe income tax on up to 50 percent of your Social Security benefits. Couples who earn more than $44,000 may have to pay taxes on as much as 85 percent of their benefits.\r\nMarried people who file separate tax returns and receive Social Security typically have to pay some tax on their benefits. This is because for people in this category, the limits are zero, meaning that up to 85 percent of Social Security benefits may be subject to the income tax.\r\n 3. Determine exactly how much of your benefit may be taxed.\r\nThis can get complicated, depending on your personal situation, especially if you have to include 85 percent of your benefits as part of income for tax purposes. To do it right, you need to fill out a step-by-step worksheet, or rely on tax software or your accountant. You can find a worksheet at the IRS website.\r\nEvery January, you should receive a Form SSA-1099 that tells you your total Social Security benefits for the prior year. You need this information for your federal tax return.\r\nHere’s an example: Tom and Carol are a married couple who file jointly. Tom’s Social Security benefit comes to $7,500, and Carol’s spousal benefit adds another $3,500. Tom also gets a taxable pension of $22,000 from his former job with an automaker and interest income of $500 from some certificates of deposit. Tom and Carol figure out their provisional income by adding $22,000 plus $500 plus $3,750 (half of Tom’s benefit) plus $1,750 (half of Carol’s benefit) for a total of $28,000.\r\n\r\nTom and Carol pay no federal income tax on their Social Security benefits, because their provisional income of $28,000 comes in below the $32,000 threshold for a married couple filing jointly. But suppose they had more income. What if Tom’s pension came to $30,000? That extra $8,000 would boost the couple’s provisional income to $36,000 — well above the $32,000 threshold for married couples. In this case, Tom and Carol would owe income tax on about 18 percent of their Social Security benefits.\r\nAs of this writing, U.S. citizens who live in certain countries, including Canada, Chile, Germany, Greece, Ireland, Italy, Japan, Switzerland, and the United Kingdom, don’t have to pay income tax on Social Security or are subject to low rates, no matter how big their income. This is because of tax treaties between the United States and those nations. (The list may change over time.)\r\n\r\nPaying your taxes ahead of time\r\nYou may be required to send quarterly estimated payments to the IRS if you have tax liability that isn’t handled through withholding from an employer. Separately, you may request to have federal taxes withheld from your Social Security payments. You can get the IRS Form W-4V to request voluntary withholding or call the IRS at 800-829-3676 (TTY 800-829-4059). There’s also a link to the form through the Social Security Administration (SSA).\r\n\r\nIf you choose to withhold federal income taxes, you can select only among certain percentages: 7 percent, 10 percent, 12 percent, or 22 percent of your monthly benefit. You should return the signed form to your local SSA office.","item_vector":null},"titleHighlight":null,"descriptionHighlights":null,"headers":null}]},"relatedArticlesStatus":"success"},"routeState":{"name":"Article3","path":"/article/business-careers-money/personal-finance/social-security/how-to-estimate-how-much-social-security-youll-get-each-month-143703/","hash":"","query":{},"params":{"category1":"business-careers-money","category2":"personal-finance","category3":"social-security","article":"how-to-estimate-how-much-social-security-youll-get-each-month-143703"},"fullPath":"/article/business-careers-money/personal-finance/social-security/how-to-estimate-how-much-social-security-youll-get-each-month-143703/","meta":{"routeType":"article","breadcrumbInfo":{"suffix":"Articles","baseRoute":"/category/articles"},"prerenderWithAsyncData":true},"from":{"name":null,"path":"/","hash":"","query":{},"params":{},"fullPath":"/","meta":{}}},"dropsState":{"submitEmailResponse":false,"status":"initial"},"sfmcState":{"status":"initial"},"profileState":{"auth":{},"userOptions":{},"status":"success"}}{"data":{"status":"Internal server error: String cannot be of zero length. 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