People here in Atlanta often ask us if Social Security will be around when “they” retire. Our answer is, “Yes”. It may change, but it isn’t going away anytime soon.
Today, approximately 90% of people aged 65 and older receive a Social Security benefit check each month. For many, this benefit is their primary source of retirement income.
Each year you work, you and your employer contribute to the Social Security program in equal amounts. In 2007, 6.2% will be withheld from your paycheck, with another 1.45% going to Medicare, for a total contribution of 7.65% (unchanged from 2006). Your employer matches contributions with another 7.65% of your total earnings. After you reach an earnings cap of $97,500(in 2007), no further Social Security contributions are deducted. However, there is no cap on earnings for Medicare contributions.
Your benefits are based on a calculation that includes how many years you worked and how much you earned. These figures are used to determine the number of quarterly credits you accumulated toward benefits. If you were born prior to 1938, you may collect full Social Security benefits when you turn 65, or you may collect 80% of your benefit if you retire at 62. For people born after 1938, Normal Retirement Age (NRA), or the age at which you can receive full benefits, gradually increases from age 65 to age 67. To determine your NRA, visit https://www.ssa.gov. When you die, your surviving spouse is entitled to your benefits, unless he or she would collect more based on their own earnings history.
Your Social Security account opens once you receive a Social Security card. However, it is not activated until you begin earning income. Once your earnings begin, the amount you contribute each year is recorded.
The Social Security Administration encourages people to check their earnings records every three years or so, because the earlier a problem is found, the easier it is to correct.
How Your Benefits Are Taxed
Once you begin receiving retirement benefits, you may have to include them as part of your taxable income reported to the IRS each year.
If your total income for the year, including half of your Social Security and your tax-exempt earnings, is greater than $32,000 ($25,000 for single taxpayers), you will owe federal income tax on a portion of your Social Security benefits. The IRS provides a worksheet to help you determine how much you must include in your taxable income each year.
The Social Security Administration paid approximately $539 billion in benefits to nearly 49 million people in 2006
Social Security benefits were awarded to more than 4 million people
Among elderly Social Security beneficiaries, 54% of married couples and 74% of unmarried persons receive half or more of their income from Social Security.
Women accounted for 57% of adult Social Security beneficiaries
The average age of disabled-worker beneficiaries was 51
Disability and blindness were the reasons for paying 82% of Supplemental Security Income recipients
Planning for your retirement is not always the forefront of everyday life. However, living in Atlanta, Ga we know life moves fast. Scarlet Oaks Financial Services offers Social Security planning everyday. If you would like to check to see what benefits are available to you, contact our office and we can schedule an appointment for you.
Scarlet Oak Financial Services can be reached at 800.871.1219 or contact us here. Click here to sign up for our weekly newsletter with the latest economic news.