Social security, designed to pay retired workers, is a sustainable income after retirement and covers about 64 million Americans, according to its website. However, despite how much you hear about Social Security in the news, a new survey shows that 30% of Americans still feel they need more education on the subject.
The new GOBankingRates survey finds it interesting enough that the generation that says they need more education on social security the most is the age group 55 to 64 years, with 40%. This is followed by both the age group 18 to 24 years and the age group 25 to 34 years with 34%.
Given that social security pension benefits, on average, replace 40% of early retirement income for retirees, it is never too early to understand how it works and what special situations you need to be aware of.
Dan Demian, financial advisory expert at the banking app Alberttold GOBankingRates that social security is important to understand because if you do not save up for retirement, social security payments can be your only source of income when you stop working and what you earn during your working years affects how much you Possibly. get paid in pension.
“Your social security payment is not a secure thing. It depends on several factors, such as your average income, working year and social security balance, which can change. So it would be best if you planned to save up for your pension independently,” he said. he.
If you feel that you lack any knowledge about social security, here are some of the most important questions to understand.
How to qualify
To qualify for Social Security benefits, you must be 62 years of age or older, or disabled or blind and “insured” by having enough work credits.
In addition, for applications filed on or after December 1, 1996, you must be either a U.S. citizen or a legally resident alien to receive monthly social benefits, according to the Social Security website.
Americans start their entitlement by working and paying Social Security taxes, either through payroll deductions (required by the Federal Insurance Contributions Act or FICA) or through income tax applications if you are self-employed (required by the Self-Employed Contributions Act, or SECA), explains AARP.
You qualify for social security by collecting credits when you pay social security tax on your earnings. You can earn up to four credits a year. Workers qualify for Social Security retirement benefits when they reach 40 lifetime credits, AARP adds.
How much do you get
Social security benefits depend on how much you have earned during your working career. Higher lifetime earnings result in higher benefits. If there were some years you did not work or had low earnings, your benefit amount may be lower than if you had worked stably, according to SSA’s Social Security Matters website.
It is important to know that you can receive pension benefits from the social security already at the age of 62. However, the benefits will be reduced. When you defer benefits beyond your full retirement age, your retirement benefit will continue to increase until age 70.
“It’s not the first thing that comes to mind after a traumatic event, but the death of a spouse (or former spouse, or a parent if you are under 18) has consequences for when (and for how much) you may claim the survivor benefit, ”Jason Vissers, financial analyst, MerchantMaverick.com, told GOBankingRates. “Similarly, if you become disabled or seriously ill and unable to work, you will need to become familiar with how SSDI benefits work.”
SSA explains that widows and widowers can qualify if he or she is:
Age 60 or older; or
50 or older and disabled; or
Divorced, 60 years or older (50 years if disabled) and was married to the other person for at least 10 years before the divorce; or
Under 60 years of age and care of the former couple’s child (under 16 years of age or disabled before 22 years of age) and who is entitled to child benefits; or
Divorced, under 60 years of age and caring for his or her child (under 16 years of age or disabled before 22 years of age) who is entitled to benefits from the other person’s register
Another potentially confusing scenario is divorce, Ted Rossman, senior industry analyst, CreditCards.comtold GOBankingRates.
“You could potentially claim benefits based on a previous spouse’s work records as long as you were married for 10 years or more,” he said. “In all cases, it is important to run the numbers. For example, should you make a claim based on your own work history or that of your spouse (or former spouse)? When should you make claims? Etc. It’s a big decision, so do not be afraid to ask questions and get help from a professional if necessary. ”
To be eligible for the Social Security’s Divorced Spouse Benefit Program, you must meet the following requirements:
Be at least 62 years old and not currently married
Get divorced from a person who receives social security pension or disability benefits
Have been married to this person for at least 10 years before the date the divorce became final
Do not be entitled to an equivalent or higher pension or invalidity benefit
In any case, Rossman said it is absolutely important to understand how social security works the closer you get to retirement age.
“If you’re currently in your 20s, 30s or even 40s, I would not think much about social security because a lot could change between now and when you are eligible for benefits,” he said. “Once if you’re in your 50s or 60s, then it’s very important to understand what social security means to you. It’s confusing, and I’m not surprised that a lot of people have questions. The more complex your situation is, the more you can benefit from a consultation with a financial advisor. ”
More from GOBankingRates
Method: GOBankingRates surveyed 1,012 Americans aged 18 and older from across the country between March 8 and March 9, 2022, and asked sixteen different questions: (1) Do you consider yourself financially capable ?; (2) Where did you learn most of your financial skills ?; (3) What financial subject do you think you should have learned more about in high school? (Choose the one that fits); (4) What economic topic do you still feel you need more education about in 2022? (Choose the one that fits); (5) When you were growing up, did your parents talk to you about how to manage your money ?; (6) Do you think colleges lack financial education ?; (7) How has a lack of financial education cost you the most ?; (8) At what age did you become familiar with basic money skills (ie writing a check, balancing your accounts, budgeting) ?; (9) At what age did you start saving up and planning retirement ?; (10) How are you doing with how you used your 2021 American Rescue Plan stimulus check ?; (11) What economic topic did you feel the need to learn more about because of the COVID-19 pandemic? (Choose the one that fits); (12) What do you not understand about the child tax deduction? (Choose the one that fits); (13) Which part of the home buying process is most confusing to you ?; (14) Which part of the car buying process is most confusing to you ?; (15) Are you prepared for the moratorium on the student loan to expire in May ?; and (16) How do you change your driving habits with the rising petrol prices? GOBankingRates used PureSpectrum’s survey platform to conduct the poll.
This article was originally published on GOBankingRates.com: Social Security in 2022: Many Americans feel they lack education in it – here’s a quick guide