Social Security is the common name for the United States federal government’s Old-Age, Survivors, and Disability Insurance (OASDI). The program guarantees the nation’s most vulnerable citizens can depend on a minimum sustenance and care support. Taxpayers fund Social Security through payroll taxes, self-employment contributions, and IRS investment of these funds into special government trusts. The Social Security Cost of Living Act (COLA) guarantees increases in benefits amounts to account for inflation but in recent years the official inflation rate has been low enough that they have not given Cost of Living increases. Americans become eligible to draw Social Security benefits when they reach age 62 but depending on the year you were born you may not get full benefits until you are 67 (or older). To ensure you will receive your full Social Security benefits when the time comes, you need to begin planning for your future now. The following measures can help you plan for and protect your benefits.
Get Enough Credits
In order to qualify for Social Security you need to have enough “Credits”. According to the Social Security Administration “Credits are the “building blocks” we use to find out whether you have the minimum amount of covered work to qualify for each type of Social Security benefits.” When you work and pay Social Security taxes, you earn up to a maximum of four “credits” for each year. In 2016, you had to earn $1,260 in covered earnings to get one Social Security or Medicare work credit and $5,040 to get all four credits for the year. If you were born in 1929 or later, you need 40 credits (10 years of work) in order to be eligible to collect Social Security. You can check your current standings by reading the paper statement sent to you by the Social Security Administration annually or by creating an account and logging in to their website.
Guard Your Social Security Number
Your Social Security number is your lifelong link to earnings put toward retirement. It also shows your eligibility for employment and tracks your credit history. It is a key component in identity theft and other scams so it is important that you only give your Social Security number to your spouse and next of kin for formal and legal purposes. Never allow anyone to use or borrow your Social Security number to obtain credit or services.
Keep Your Information Current with the Social Security Administration (SSA)
Contact your local SSA if:
- Your card is lost, stolen or damaged. You can apply for a replacement card online in some states.
- You move. You do not want your benefits check going to another household.
- You suspect you are a victim of identity theft or you stop receiving your Social Security checks. A Social Security attorney can advocate to protect your benefits.
Estimate Your Future Benefits
The Social Security Administration provides several ways to estimate your future benefits. You can use their Retirement Estimator for a retirement estimate based on real time access to your earnings record. They also have other calculators that require you to manually enter your earnings for each year from your statement but they might provide more options for testing retirement scenarios.
Pay Your Taxes
Social Security benefits have enormous protection from the federal government. Creditors may not subtract debts from your Social Security benefits allowance. However, the U.S. government is one exception. If you owe IRS taxes or federal debt, such as student loans and child support, the government can eat into a portion of your benefits on the following scale:
- 15% for IRS taxes
- 15% after the first $750 for student loans
- 50-65% for unpaid child support payments
Pay Consumer Debt
Unpaid debt from credit cards, medical bills and more can lead to lawsuits, wage garnishments, and asset liens. According to the Law Office of Nancy L. Cavey, these misfortunes affect your abilities to pay into Social Security and set aside supplemental savings for the future. If you are drowning in debt, consider refinancing or consolidation to lower monthly payments and start saving more.
Social Security is not merit-based or competitive. Social Security is a powerful program that provides a basic supplement for Americans but was not designed to be your entire retirement support. You should still save and invest as you go along, so social security can be an excellent additional benefit in your older years. Understanding social security benefits and planning your future are two ways to retire comfortably and enjoy your golden years.
About the Author:
Eileen O’Shanassy is a freelance writer and blogger based out of Flagstaff, AZ. She writes on a variety of topics and loves to research and write. She enjoys baking, biking, and kayaking. Check out her Twitter @eileenoshanassy
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