October 25, 2016

Understanding Social Security: 35 years of earnings

While many Americans have strong opinions about Social Security, and too many people falsely believe that it won't be there for them due to irresponsible media reports and irresponsible politicians, this blog attempts to educate people about the realities of Social Security. The Squared Away Blog from the Center for Retirement Research at Boston College, explains how the formula for retirement benefits is calculated. This info is especially important for persons considering stopping working before they have accumulated 35 years of earnings (and paying FICA taxes).
"To qualify for a pension benefit at all, a person must work full- or part-time for 40 quarters – a total of 10 years." (and pay FICA taxes on their wages).
The "size of your future benefit check... is determined by your highest 35 years of indexed earnings." The Squared Away blog explained how "indexed" earnings are calculated. At least as important for many workers is that if you pay SS taxes on less than 35 years of earning, zeros are entered into the calculation. So it may be worthwhile, especially if SS will comprise a large portion of your retirement income, to work a few more years so years of zero earnings are dropped from the formula.
Learn more at: http://squaredawayblog.bc.edu/squared-away/your-social-security-35-years-of-work/

1 comment:

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