Social Security is the Government Pension Plan that is paid for by taxes on your income.
Social Security replaces about 40% of your income after retiring. However, you will generally need 70% or more of your pre-retirement income. Here in towns like Wilton and North Salem the cost of living is high so it doesn’t go far.
In the big picture, you need more retirement savings than Social Security. They also need private pensions, savings, and investments.
You only need 10 years of paying into the system, but you need 35 to maximize the benefits. The current maximum benefit at 67 is about $3,500 per month or $42,000 per year, but most people only receive about 1,350 or 16,200.
Your retirement benefit is based on your earnings in your 35 highest-paid years.
Uncle Sam manages to get his money in many ways and your social security is taxable if your income is over $25,000.
While simple in concept, the Social Security system is pretty complicated in application and it may help you to consult an expert when making these decisions.
The Social Security Facts
Bottom line, you will use your Social Security and it will be meaningful to you. However, it was not designed to be your primary source of income in retirement.
Your average life expectancy at 65 is about 20 years, longer if you are in good shape, highly educated, and with high income.
About a quarter of the federal budget goes to pay social security benefits, almost a trillion dollars. 71% of the benefits are paid for retirement benefits. Disabled people receive about 16% and survivors about 13%. 48% of married couples and more than 70% of unmarried people rely on Social Security for half of their income. 21% of married couples and more than 43% of unmarried people rely on Social Security for 90% of their income. An astounding 31% of people have no money set aside for retirement.
The government actually has a pretty good website on Social Security with a wealth of information and calculators.