What is Social Security?

Social Security is often considered the backbone of the American social welfare system. Created in 1935, this program provided a valuable service to retired and elderly citizens by offering a reliable stream of income in their golden years. Before it was enacted, many were left to fend for themselves, relying on whatever savings they had managed to accumulate. Thankfully, Social Security changed all of that. Fast forward to today, and it continues to be a lifeline for countless individuals and families across the country. Let’s explore this watershed moment in history together, and see how Social Security forever changed the way we view retirement.

Who can receive Social Security?

Retirement is a phase of life that we all look forward to. After years of working hard and building a career, it’s time to sit back and enjoy the fruits of our labor. And for the vast majority of retirees in the United States, Social Security is a crucial part of that equation. With nine out of every 10 people of retirement age receiving benefits, it’s a program that ensures financial stability and peace of mind for millions of Americans. But did you know that Social Security also provides support to dependents of retired and disabled workers, as well as survivors? With a total of 18 million recipients across the country, this program truly plays a critical role in the lives of so many families.

How does Social Security work?

Your hard-earned money serves an important purpose – contributing to the Social Security Fund. By working together, both employers and employees are helping ensure that eligible individuals have access to these vital funds when they need them most. Here’s how:

• The Social Security system is funded through a compulsory contribution from all who draw a paycheck, whether as traditional employees or independent contractors. A tantalizing 6.2% of each paycheck is swept away into the system, matched dollar for dollar by employers in a display of forced generosity, all to be stowed in a vast trust for the golden years when you can finally reap the rewards of this lifelong investment and draw down more than you ever put in. The Medicare tax adds another 1.45% to the kitty, making retirement savings as unavoidable as death and taxes. While the money vanishes quietly each pay period, its accumulation and power are anything but insignificant. Let your hard-earned dollars work for your future.
• Each month, hardworking retirees who have paid into Social Security during their careers eagerly anticipate the arrival of their benefit checks. These modest but welcome payments represent a return on decades of mandatory contributions, allowing former employees to enjoy the fruits of their labor and some financial security in their golden years. Though the amounts are modest, for many Social Security payouts make the difference between comfort and hardship.

At What Age Can You Collect Social Security?

You can start receiving Social Security benefits as early as age 62, but waiting a few years can significantly increase your monthly payment. While the earliest age you can claim benefits may be tempting, holding off until your Full Retirement Age (between 66 and 67 for most people) or even age 70 allows your benefits to grow. For each year you delay claiming Social Security beyond your initial eligibility age, your benefit amount increases by about 8%—that means a potential increase of over 30% if you wait until 70 versus claiming at 62. The higher benefit amount will continue increasing with inflation each year, providing financial security and stability during your retirement. Although waiting is not feasible for everyone, it’s worth calculating to see if the larger monthly checks are worth the patience.

How much will you receive in retirement from Social Security?

The possibilities for how you might spend your hard-earned retirement are as diverse and dynamic as life itself. With an average monthly Social Security benefit of over $1,500, a world of opportunities awaits you in your golden years. Your exact amount depends on:

• Lifetime earning: The Social Security Administration gracefully rewards your lifetime of hard work by calculating your monthly benefits using your 35 highest-earning, inflation-adjusted years.
• Filing status: As you embark upon the journey of retirement, the benefits you’ve rightly earned will be there to support you—but they may arrive in different forms depending on your unique situation. Whether you’re preparing for this next chapter on your own or alongside a loving partner, Social Security has you covered so you can pursue the retirement of your dreams.
• Credits: To fully unlock the promise of retirement, you must first unlock the door to Social Security eligibility. For those born after 1929, accumulating 40 credits over a lifetime of hard work is the key – each credit earned is a year closer to the rewards of a well-deserved decade of contributions, and the peace of mind that comes from knowing a nest egg is there when you need it most. With Social Security, financial freedom in your golden years is within reach.

Can you use your Social Security benefits as your source of income in retirement?

A comfortable retirement is within your grasp, but not with Social Security alone. While those monthly checks provide a base level of income to keep you afloat in your golden years, they were never meant to fully replace your pre-retirement earnings. To truly enjoy your retirement—to travel, pursue hobbies, and live free from financial worry—you need a comprehensive plan that combines Social Security with your own savings and investments. Only then can you rest easy knowing that your dream retirement is not just a dream, but a reality you’ve diligently prepared for.

How can you learn more about your Social Security benefits?

Through an online Social Security account, you can seamlessly monitor your hard-earned lifetime contributions and watch your credits accrue in real time. This convenient portal into your Social Security records allows you to stay on top of your benefits and ensure the accuracy of your work history in an engaging, personalized way. Rather than a dry accounting of credits and contributions, an online Social Security account provides an enticing window into your long-term financial well-being.