Social security is America’s largest retirement asset. For any American worker, social security is included in their retirement plan. Social security beneficiaries fall into three categories. They receive either retirement benefits, survivor benefits or disability benefits. (Walker, 2013) The one relating to retirement benefits are the monetary benefits received by retired workers on account of the payments that they have made in the social security system while they have been employed. (Social Security benefits) The eligibility of obtaining such social security benefits is when one has worked in covered employment for 40 quarters. Only then one receives retirement benefits and gains access to potential spousal benefits to current and ex-spouses as well as children. (Helmich, 2015)
As directed by the Federal Insurance Contribution Act (FICA), when one works, he or she earns credits, and these credits translate into being social security retirement benefits. The annual earnings are a representative of the credits and four credits per year is the greatest accrual amount. Eligibility of receiving retirement benefits and full insurance is achieved once the worker has acquired 40 credits. In regards to how much one earns in his or her career, benefits payment is calculated. More earnings over a lifetime will yield in more benefits. (Administration, 2015)
Choices of retirement can vary. When a worker takes his or her social security at the age of 62, it can be taken as a case of early retirement. On account of the date of the birth of the worker, the payments per month are decreased between the brackets of 20-30 %. Even though this early scenario gives the advantage of the payment stream to be longer in respect to time but amount wise it is very few in comparison to the normal retirement case that people usually take. In case of normal retirement, the age bracket is gradually moving upwards, and it ranges from 65 to 67. On the other hand in case of late retirement, for those who wait until the age of 70 are given a bonus. Worker by the year he or she has waited earns a 7.5% bonus. Unlike the early retirement case, in this scenario the worker earns more with respect to the amount and does not lose a lot on the limited stream of payments. (Social Security)
Usually, it is suggested that social security retirement benefits should be collected at their earliest, and this age is at 62.However with the above argument and the case of extended life expectancies, waiting for the collection of these benefits is more sound for the society.
Social Security is the most protected and secure source of retirement income. It is assured to last for life, and it automatically keeps up with the cost of living. At later ages, work may no longer be an opportunity, pensions may be worn by inflation and savings may be exhausted. Thus, maximizing social security benefits for the long term can compensate for some of the declines in other sources of support. (When to Take Social Security: Questions to Consider).
The most favorable strategy of obtaining social security benefits at the time of retirement is diverse for different houses. While some workers wait until the age of 70, others file early on so that based on their work record, their wives, children or ex-wives can be facilitated. Furthermore if a worker chooses to file the benefits at an early stage, then they have the alternative of suspending their benefit at full retirement age and beginning it up on a higher value which can be let’s say 70. In case of married couples, the best possible strategy is a joint one where the spouses both can decide what fits their plans. (Helmich, 2015)
Hence, social security retirement benefits are an integral part of the American society and should be utilized upon by everyone. From these benefits not only the worker but the spouse and children also gain. It is like an investment that one has to manage and has to capitalize upon. (Helmich, 2015)
Administration, S. S. (2015, January). Retired Benefits. USA.
Helmich, N. (2015, February). Retirement-When should you take social security. Retrieved from USA today: http://www.usatoday.com/story/money/2015/02/22/social-security-retirement-financial-planning/23518483/
Social Security. (n.d.). Retrieved from Retirement Planning Centre: http://retirement.unionplus.org/money-for-retirement/social-security.html
Social Security benefits. (n.d.). Retrieved from Investopedia: http://www.investopedia.com/terms/s/social-security-benefits.asp
Walker, V. P. (2013). Social Security Benefits Finances and Policy Options. National Academy Of Social Insurance.
What is the Social Security Retirement Age? (n.d.). Retrieved from National Academy of Social Insurance: https://www.nasi.org/learn/socialsecurity/retirement-age
When to Take Social Security: Questions to Consider. (n.d.). Retrieved from National Academy of Social Insurance: https://www.nasi.org/research/2010/when-take-social-security-questions-consider