While the current Social Security program has its shortcomings, it is still an important part of everyone’s financial plan. Every paycheck you receive has 7.65% going towards your portion of the payroll tax. Your employer pays the same tax, for a total of 15.3%. If you’re lucky enough to be self-employed, you pay the entire 15.3% as a “Self-Employment Tax” on the net income your business produces.
Of the 7.65% you pay as a payroll tax, 6.2% goes to Social Security and 1.45% to Medicare. This tax is critical to help current retirees fund their living expenses and receive medical care. When you turn 62 yourself, you will be eligible to start receiving your share of Social Security retirement benefits, with the option to delay receiving benefits until age 70. It pays to delay as long as you can, in most cases, as your benefit amount increases by 8.0% per year.
A while back, I spoke with Emily Brandon of U.S. News and World Report about Social Security benefits, and she put together a nice article titled “10 Frequently Asked Social Security Benefits Questions”.
The questions she addressed are the following:
What is the Social Security retirement age?
How do you apply for Social Security?
How much Social Security will I get?
What is the Social Security tax limit?
What is the Social Security wage limit?
What is the average Social Security benefit?
What is the maximum Social Security benefit?
How do I get a new Social Security card?
How do I qualify for Social Security disability?
When will I receive my Social Security check?
As with all government programs, there are bound to be changes in the future. What you need to focus on, as with the rest of your finances, is controlling what you can control. That is your personal retirement savings rate, keeping an eye on expenses, and managing your taxes properly. Understanding that things change, it pays to stay flexible with your finances and not spread yourself too thin.
If you are interested in finding out what your Social Security benefit is currently projected to be, you can receive a copy of your statement at SSA.gov/myaccount.