LOUISVILLE, Ky. (WAVE) – What you know about social security may not be the information that you need to know the most.
Understanding your social security benefits and your savings can surely make a difference when you are trying to make ends meet once you reach retirement age. A scary analysis from a study done by the Center on Budget and Policy Priorities states that “without social security, more than 22 million Americans would fall into poverty.”
Marcus Warren is the founder and president of Warren Wealth Management and Tax Planning. He examines the financial needs and investments of those ready to retire daily to make sure they are not only ready but comfortable.
“There are 69 million Americans that rely on Social Security as their sole income source in retirement,” exclaimed Warren. “Social Security was never meant to be your sole source of retirement income.”
As a financial planner and investment advisor, Warren reminds people to be secure in retirement plans for not only social security but your savings, investments and any 401K plan or pension you may have.
And remembers social security is not one of “your” savings plans.
“When you pay into social security, it’s not your own personal pension fund,” explained Warren. “It is a social security tax. Now it has been construed to seem like I paid into this. I paid dollars into this. I paid my dollars into my Social Security. Into my social security account. I want my money.”
The money you pay right now covers current Social Security payments for present retirees. It does not go into an account for you.
With the largest wave of retirees in U.S. history as the baby boomers step out of the workplace, people living longer, and birthrates declining, the social security pool where your money is placed is not as deep.
“In 2033, people who are receiving social security or who have yet to receive social security will receive a 23% reduction in benefits,” explained Warren.
It has been estimated that if Congress does not act to reform the system, the program’s trust fund is headed toward depletion. Only incoming payroll taxes would fund the payments.
“By 2033, they say that they will only be able to pay out 77 cents on the dollar basically,” shared Warren.
You can claim Social Security retirement benefits anytime between the ages of 62 and 70.
Your payments at age 62 will be reduced. You get less money for a longer period of time.
At age 67, you receive a 100 percent payout. Delaying your payments to age 70 will give you the largest possible monthly payout.
Once you make the selection, that is what you receive for the entirety of your life. You should also know that Social Security payments can also be taxed.
“Your social security can be taxed if you’re over a certain income threshold, and up to 85% of your social security can be taxed,” explained Warren.
If you are still on the job, not quite ready to step into your golden years plan, plan, plan, for that day.
“Make sure you’re contributing to your company retirement plan, your IRA, things of that nature,” stresses Warren. “That you’re putting money away first. That you’re paying yourself first.”
Social Security doesn’t just happen.
You’ve got to apply for Social Security when you are ready, and you have to decide when and how much money you’d like to take from your benefits. You must fill out an application online or at your local Social Security Administration office.
A government representative will contact you by mail to start the verification process. This is done by mail until you sign up for text or phone messages.
Be sure to watch out for scams. Scammers are always ready to take your money.
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