What Is A Social Security Card
Your Social Security card is an important piece of identification. You’ll need one to get a job, collect Social Security, or receive other government benefits.
When you apply for a Social Security number , the Social Security Administration will assign you a nine-digit number. This is the same number that is printed on the Social Security card that SSA will issue you. If you change your name, you will need to get a corrected card.
How To Set Up Your My Social Security Account
Before you get started you will want to have a few things ready so that you can provide the necessary information or documents when prompted by the my Social Security sign-up process. If you want extra security for logging on in the future, you can use two-factor authentication, where you receive a security code by text or via phone call.
If you dont already have the app on your smartphone, you will want to download one to your phone before you get started with the email you will use for your account. You may also want to create a strong password before you get started, it should be at least 12 characters including numbers and symbols.
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You will want your drivers license or another form of state-issued ID on hand and your smartphone to take a picture of the document when prompted. For those who wish to add even more security, you can use the last eight digits from your credit card or other financial information such as a tax document.
If you have a security freeze, fraud alert, or both on your credit report, you can still use the online process but first you will need to request a temporarily lift of your security freeze or fraud alert. You can contact the Social Security Identity Services Provider to have them do this.
S For Setting Up Your Account
Once your ready, visit the my Social Security sign-up page and
Click the Create a new account link. If you have an ID.me you can use this one, or you can create your new account using Login.gov. Login.gov is a secure government portal that lets you use one set of credentials to access multiple participating federal agencies.
Near the bottom of the page on the next screen click on Create an account. You will be prompted to enter your email, choose a language preference, confirm your email, and create a strong password over a series of new screens.
Youll now be asked how you want the my Social Security online portal to verify that its you when you use the account. Here you can choose to use two-factor authentication which is recommended given the sensitivity of the information.
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Next, read and accept the terms of service account. Afterwards, youll be asked to enter your personal information which the SSA can use to identify you, including your name , address, date of birth and Social Security number.
Now, if you wish you can add extra security using financial information before mentioned.
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Max Out Earnings Through Full Retirement Age
The SSA calculates your benefit amount based on your earnings, so the more you earn, the higher your benefit amount will be. Some pre-retirees look for ways to increase their income, such as taking on part-time work or generating business income. Others, however, unaware of the impact on benefits, may scale back on their work or semi-retire, which can lower their Social Security income.
“Money earned after age 60 isn’t indexed, which means that income-earning in your 60s can replace a year in which there was a zero or a year in which you had lower earnings,” says Marguerita Cheng, CFP®, CRPC®, RICP, CDFA, CEO of Blue Ocean Global Wealth, Gaithersburg, MD.
Earnings above the annual cap$142,800 in 2021 and indexed to inflation each yearare left out of the calculation. Your goal should be to maximize your peak earning years, striving to earn at or above the cap.
How To Check Your Social Security Statement And Why You Should
Modified date: Apr. 19, 2019
If youre investing for your retirement, you shouldnt forget about the income youll earn from Social Security.
Even though it may be decades away, its possible to get an estimate as to what your retirement benefits will be.
All you have to do is get a copy of your Social Security Statement. Its easy to do, and its an absolutely necessary step in planning for your retirement.
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Avoid Social Security Tax
If you are planning on supplementing your retirement income by working after you start receiving Social Security benefits, you need to be aware of the tax consequences of increasing your income. Anywhere from 50% to 85% of your benefit payment can be subject to federal taxes.
To determine how much of your benefits will be taxed, the IRS will add your nontaxable interest and half of your Social Security income to your adjusted gross income . If that total amounts to $25,000 to $34,000 for single filersor $32,000 to $44,000 for joint filersup to 50% of your Social Security income is subject to tax. When that amount exceeds $34,000 for a single filer or $44,000 for joint filers, up to 85% of your benefits are subject to taxes.
You may be able to avoid paying taxes on Social Security income by considering ways to spread out your income from various sources so as to prevent any increases that could trigger a higher tax.
“Many investors have a ‘tax honeymoon’ period between retirement and age 72. They have no earned income and are not required to withdraw from their IRAs yet. If they have a nonqualified account, they can withdraw tax-free principal. In this situation, it is quite possible that Social Security benefits will be tax-free,” says James B. Twining, CFP®, wealth manager, Financial Plan, Inc., Bellingham, WA.
Adjust Your Pia For The Age You Will Begin Benefits
The final amount of Social Security retirement benefit that you receive is based on the age when you begin benefits.
Of course, another complex formula is used to determine how much more you will receive if you wait.
This formula uses your Primary Insurance Amount calculated in the previous step. This is the amount you will get if you start benefits at your full retirement age . Your FRA can vary, depending on the year you were born. For people born between 1943 and 1954, as in our example, the FRA is age 66.
For people born on Jan. 1, the FRA is based on the year prior. Someone born on Jan. 1, 1955, will have an FRA based on 1954.
A reduction is applied to your PIA if you begin benefits before your FRA. A credit, referred to as a “delayed retirement credit,” is applied if you begin to receive benefits after your FRA.
Get A Copy Of Your Social Security Statement
Get a Copy of Your Social Security Statement
In the past, the Social Security Administration has mailed out yearly statements to all workers showing their cumulative Social Security contributions over the course of their employment history. These statements can be helpful if you are interested in knowing exactly what you would receive in Social Security benefits through the Old Age/Retirement program, the Social Security Disability Insurance program, or through the Supplemental Security Income program.
Getting a Copy of Your Statement
Although the SSA no longer mails out annual statements to workers, you can still request a copy of your statement to get a better idea of the amount of benefits you may be eligible to receive through any of the SSAs programs. Statements can be obtained in one of the following three ways:
Creating an Online Account
Creating an online account with the SSAs website takes only a few minutes, and requires minimal personal information. Once you have established your account, nothing is required to maintain access other than periodically adjusting your password in order to keep your information secure. To create your online account and get a copy of your Social Security statement, simply visit the SSAs website.
Your Social Security Statement
Your statement will also contain other useful information including:
How Do Benefits Work And How Can I Qualify
While you work, you pay Social Security taxes. This tax money goes into a trust fund that pays benefits to:
Those who are currently retired
To people with disabilities
To the surviving spouses and children of workers who have died
Each year you work, youll get credits to help you become eligible for benefits when its time for you to retire. Find all the benefits Social Security Administration offers.
There are four main types of benefits that the SSA offers:
Learn about earning limits if you plan to work while receiving Social Security benefits
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Social Security Benefits: How To Determine How Much You Get
There are three main methods that people use
- Social Security Taxes 2022.Are payroll taxes changing in 2022?
Many people in the United States who are nearing retirement age will have been putting money towards their Social Security for decades, but when it comes to figuring out just how much the Social Security Administration owes you, it can be a bit tricky.
It’s possible that you and your employer, over many years, could have put more than $200,000 into the Social Security system on your behalf, so it’s important to know what your Social Security Income might be as a result.
How To Receive Federal Benefits
To begin receiving your federal benefits, like Social Security or veterans benefits, you must sign up for electronic payments with direct deposit.
If You Have a Bank or Credit Union Account:
- Call the Go Direct Helpline at .
If You Don’t have a Bank or Credit Union Account:
- Direct Express debit card – a pre-paid debit card. Get help by calling the Go Direct Helpline at .
Make Changes to an Existing Direct Deposit Account:
Learn how to make changes to an existing direct deposit account. You also may contact the federal agency that pays your benefit for help with your enrollment.
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Fact #: Social Security Benefits Are Modest
Social Security benefits are much more modest than many people realize the average Social Security retirement benefit in June 2020 was about $1,514 a month, or about $18,170 a year. For someone who worked all of their adult life at average earnings and retires at age 65 in 2020, Social Security benefits replace about 40 percent of past earnings. This replacement rate will slip to about 35 percent for a medium earner retiring at 65 in the future, chiefly because the full retirement age, which has already risen to 66, and is gradually climbing to 67 over the 2017-2022 period.
The average Social Security retirement benefit in June 2020 was $1,514 a month, or about $18,170 a year.
Moreover, most retirees enroll in Medicares Supplementary Medical Insurance and have Part B premiums deducted from their Social Security checks. As health care costs continue to outpace general inflation, those premiums will take a bigger bite out of their checks.
Social Security benefits are modest by international standards, too. The United States ranks just outside the bottom third of developed countries in the percentage of an average workers earnings replaced by the public pension system.
Social Security lifted 1.5 million children out of poverty in 2018, as the chart shows.
Beginning Benefits Before Fra
If you choose to begin to receive benefits before you reach your full retirement age, one or both of the following calculations will apply:
- 5/9 of 1%: Your benefits are reduced by 5/9 of 1% per month, up to a maximum of 36 months, depending on how many months you have until you reach FRA.
- 5/12 of 1%: If you are more than 36 months away from reaching FRA, the reduction above is applied, and then for the number of months greater than 36, the benefit is further reduced 5/12 of 1% per month.
Therefore, if your FRA is age 66, your benefits would be reduced by 25% if you begin taking them at age 62. Find that figure by taking 5/9 of 1%, or 0.56 multiply by 36 months to get 20%. Then, 5/12, or 0.42, multiplied by the remaining 12 months, is 5% for a total of 25%.
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Disability And Survivor Benefits
In addition to retirement benefit eligibility, the statement also provides estimates as to what your monthly income would be if you claimed disability benefits.
There are also estimates for how much monthly income through survivor benefits your eligible spouse or minor children may receive if you pass away.
Think Of Social Security As An Annuity
“Given todays longevity, it is more important than ever to maximize your Social Security benefit. Think of this as an annuity for your lifetime,” says Charlotte A. Dougherty, CFP®, founder of Dougherty & Associates, Cincinnati, OH.
“Social Security is the only 8% guaranteed investment around. Not only that, it is backed by the federal government,” says David Hunter, CFP®, Horizons Wealth Management, Inc., Asheville, NC.
Although there are many planning options for maximizing Social Security benefits, they can be complex and only apply in certain circumstances. The following five planning tips are ones that everyone should know about in order to increase the size of their Social Security checks.
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Claim Spousal Benefits And Delay Yours
If you and your spouse were born before Jan. 2, 1954, and have both reached full retirement age, you can claim spousal benefits and let your own benefits keep growing. Then, when you reach age 70, you can switch to your higher benefit.
One caution: You can’t have claimed your own benefit if you want to make use of this “restricted application,” as it’s called.
In order to claim a spousal benefit, your spouse must have filed for their own Social Security benefits .
How To Determine Your Social Security Benefits
While Social Security benefits are not guaranteed, the quality of your retirement is down to the way in which you have planned ahead.
It is worth figuring out the amount in financial sum of your retirement benefits in order to determine what your years of Social Security contributions entitle you to.
You can do this in a variety of ways, but some of the most common methods is to:
- Visit a local Social Security office to obtain a record of your taxed Social Security earnings and an estimate of retirement benefits
- Visit the Social Security website and use one of their online benefit calculators to work out your retirement estimate based on your earnings record
- Wait until you decide to start receiving benefits and allow the SSA to calculate the amount for you
Many people, rather than visit a Social Security office, now try to transact their business either online, over the phone or via mail, as many offices have been affected by the ongoing COVID-19 pandemic.
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How Do You Calculate Your Social Security Taxes
“Social Security taxes” can refer to taxes paid into the Social Security system or taxes paid on Social Security benefits. The taxes that fund Social Security come from the payroll tax, which is 6.2% for employees or 12.4% for self-employed individuals.
When you’re receiving Social Security benefits, you’ll still have to pay income taxes, but you won’t owe taxes on all of your benefits. Those whose total annual income tops $34,000 will pay income tax on 85% of their Social Security benefits. Otherwise, they will pay income tax on 50% of their Social Security benefits.
Simple Strategies To Maximize Your Benefits
Thomas J Catalano is a CFP and Registered Investment Adviser with the state of South Carolina, where he launched his own financial advisory firm in 2018. Thomas’ experience gives him expertise in a variety of areas including investments, retirement, insurance, and financial planning.
Kirsten Rohrs Schmitt is an accomplished professional editor, writer, proofreader, and fact-checker. She has expertise in finance, investing, real estate, and world history. Throughout her career, she has written and edited content for numerous consumer magazines and websites, crafted resumes and social media content for business owners, and created collateral for academia and nonprofits. Kirsten is also the founder and director of Your Best Edit find her on LinkedIn and Facebook.
When Social Security was introduced in 1935, it was never intended to be a primary income source that could support people in retirement. Rather, its sole purpose was to provide a safety net for people who were unable to accumulate sufficient retirement savings. For the next several decades, the majority of Americans never gave much thought to their Social Security because of shorter lifespans and reliance on guaranteed pensions.
Things are very different today.Social Security planning is now a vital element in securing income sufficiency in retirement and there are strategies to maximize your benefits.