Let's Talk Social Security (Part 1)
Uncategorized
Jul 18, 2020
When Social Security was set up back in 1935, it was set up as a pay as you go type of system. Basically the workers of the day were funding the retirees of the day. The way one receives Social Security retirement and/or Social Security disability benefits are through FICA (Federal Insurance Contributions Act) taxes that are paid from employee's wages. In other words the FICA tax is the money that is taken out of workers' paychecks to pay older Americans their Social Security retirement and Medicare (Hospital Insurance) benefits. It is a mandatory payroll deduction.
When it comes to retirement, Social Security for many is looked at as the main source of income for their retirement. I need to say that Social Security was never set up to be a person's only means for retirement. Most financial experts agree that it would take about 70%--80% of one's pre-retirement income to live comfortably in retirement. Social Security was only set up to provide just 40% of that. Social Security should only be the foundation of one's financial future, the blocks on top of that ought to be pensions, investments, and savings.
It's important that you know what you've paid into Social Security so you can estimate what you would receive upon retirement, if you became disabled, or if married possibly survivor benefits. One way this can be done is by creating a mySocial Security account. Creating this account will give you access to your Social Security statement where you can view your earnings as well as estimates for retirement, disability, and survivor benefits.
It is great to have Social Security as a safety net that keeps millions out of poverty; however, having your own plan in place is key to your financial security. To win with money is more than just numbers...it's more about behavior.
Do you have a financial plan you need guidance with or do you need to establish one? I can help! Contact me at True Prosperity Financial Coaching. Let's talk!
