Monday, 13 October 2014

Vital Essentials You Should Know About Social Security – Wall Street Finance

Posted at  07:21  |  in  Stock Market

For majority of the Americans, Social Security benefits serve to be their bedrock of retirement income. Maximizing and enhancing this particular stream of income is indeed critical to fund your retirement dreams. While there are many seniors who wait for their Social Security benefits, there are some others who systematically keep tucking aside money for their retired life. Although the rules for claiming the benefits can be complex enough, yet this set of advices and information by the Wall Street financial advisors will help you wade through the details. By enhancing your knowledge on Social Security, you can ensure claiming the maximum amount of benefits to which you’re already entitled. Have a look at some detailed information.

  1. Social Security is all about your age: Your age when you collect your Social Security benefits has a big effect on the amount of money that you ultimately receive from that program. The key age to get all the benefits is your full retirement age. For all those people who were born between 1943 and 1954, their full retirement age is 66 but this age gradually moves up to 67 if your birthday falls between 1955 and 1959. Although you can collect your Social Security payments as soon as you turn 62, but taking such benefits before reaching the full retirement age will result in a permanent deduction of as much as 25% of your entire benefit. Instead of allowing such a reduction, it is better to collect it after reaching the full retirement age.
  1. The factors that affect the benefits: In order to be eligible for your Social Security benefits, you should earn at least 40 “Credits”. You can earn up to 4 credits in a year and hence it takes almost 10 years of work to qualify for the Social Security. In 2014, you should earn $1,200 to get one Social Security work credit and $4800 to get maximum 4 credits in a year. In short, your benefit is based on the 35 years in which you’ve earned the highest amount of money.
  1. The cost-of-living adjustment: One of the most attractive features of Social Security benefits is that every year the government adjusts the benefit for inflation which is known as a cost-of-living adjustment, or COLA. This is a sort of inflation protection that helps you keep up with rising living costs during retirement. The COLA is automatic and it quite precious as purchasing inflation protection on a private annuity can cost you a dear dollar. The COLA is calculated based on changes in a federal CPI (Consumer Price Index), the size of the COLA depends largely on huge inflation levels that are determined by the government.
Apart from these, there are extra benefits of being a spouse. Marriage brings couples an added advantage when it comes to claiming Social Security benefits. One spouse can take what is called a spousal benefit, which is worth up to 50% o the benefit of the other spouse. This calculation however changes when the benefits are claimed before the full retirement age as you don’t get the full 50%.

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