There are a number of programs included in the original Social Security act and the current version. One of them is the Federal Old Age Retirement, Survivors and Disability Insurance.
Funding for Social Security comes from payroll taxes known as the Federal Insurance Contributions Act or FICA. It’s the biggest Government program in the world and the main expense in the Federal Budget. For example, more than half a trillion dollars is paid out in benefits each year and this number is growing.
Social Security In Retirement
Social security should be included in your retirement planning estimates and is the largest single factor which keeps people in retirement out of poverty. Social security benefits are paid at the earliest when a person turns 62 but full retirement benefits depends on when a person was born.
If a person was born before 1938 then the retirement age is 65 and there are variations after this where it increases up to two months for each following year of birth. It sounds complicated and on the surface it is, and it’s an area you want to become familiar with when sitting down and planning your retirement.
Social Security Benefits Age
If you are using a retirement calculator and want to factor in your social security benefits then your current age and retirement date are important. The official full benefits age for a retiree is 67 but as we mentioned earlier, the earliest you can receive benefits in a reduced amount is 62.
The reduced benefits we mention here may have changed slightly so double check but if you are planning retirement at age 62, then you can expect to receive around 70-80% in benefits of your full entitlement. It varies according to the three main full retirement ages of 65-67 with the highest benefit for those receiving at age 62 and having a normal retirement age of 65 being 80%.
Retirement Estimator Benefits Calculator
Confused? We understand but different changes to laws prior to 1960 make it look confusing but really, all you need to know is when you were born and then check the laws pertaining to your age and which law change relates to you. For example, if you were born before 1938 then the retirement age is 65.
Finally and this is important, if you delay receiving Social Security benefits past your official retirement age then a credits system comes into play. These retirement credits increase one’s benefits by the time they turn 70.
Click the link for more information on Social Security benefits entitlements. You can also check for an estimate on Social Security through this Retirement Estimator Benefits Calculator.