Monday, April 07, 2014

What it pays to know about Social Security -- 10 things you should know about Social Security --- Every week the government takes money out of your paycheck, with plans to return it to you when you're retired. If that's all you know about Social Security, read on. --- For many Americans, Social Security benefits are the bedrock of retirement income. Yet future retirees could find themselves on shaky ground. The Social Security Board of Trustees, in its latest annual report, estimated that the retirement program would only be able to pay out 77 percent of scheduled benefits starting in 2033. -- You can't control how the government might fix that problem. But you can educate yourself about Social Security to ensure that you claim the maximum amount of benefits to which you are entitled. Here are ten essentials you need to know. --- Your age when you collect Social Security has a big impact on the amount of money you ultimately get from the program. The key age to know is your full retirement age. For people born between 1943 and 1954, full retirement age is 66. It gradually climbs toward 67 if your birthday falls between 1955 and 1959. For those born in 1960 or later, full retirement age is 67. You can collect Social Security as soon as you turn 62, but taking benefits before full retirement age results in a permanent reduction of as much as 25 percent of your benefit. --- Besides avoiding a haircut, waiting until full retirement age to take benefits can open up a variety of claiming strategies for married couples. (More on those strategies later.) Age also comes into play with kids: Minor children of Social Security beneficiaries can be eligible for a benefit. Children up to age 18, or up to age 19 if they are full-time students who haven't graduated from high school, and disabled children older than 18 may be able to receive up to half of a parent's Social Security benefit. --- To be eligible for Social Security benefits, you must earn at least 40 "credits." You can earn up to four credits a year, so it takes ten years of work to qualify for Social Security. In 2014, you must earn $1,200 to get one Social Security work credit and $4,800 to get the maximum four credits for the year. --- Your benefit is based on the 35 years in which you earned the most money. If you have fewer than 35 years of earnings, each year with no earnings will be factored in at zero. You can increase your benefit by replacing those zero years, say, by working longer, even if it's just part-time. But don't worry -- no low-earning year will replace a higher-earning year. The benefit isn't based on 35 consecutive years of work, but the highest-earning 35 years. So if you decide to phase into retirement by going part-time, you won't affect your benefit at all if you have 35 years of higher earnings. But if you make more money, your benefit will be adjusted upward, even if you are still working while taking your benefit. --- There is a maximum benefit amount you can receive, though it depends on the age you retire. For someone at full retirement age in 2014, the maximum monthly benefit is $2,642. You can estimate your own benefit by using Social Security's online Retirement Estimator. - MORE, Rachel L. Sheedy, Kiplinger, at: http://money.msn.com/retirement/10-things-you-should-know-about-social-security

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