The social security system in the United States has been designed to ensure that the senior citizens are able to obtain a source of income at the end of their working life. As one works till the age of retirement and pays taxes, a portion of the tax amount accumulates toward social security benefits. Although the social security income, in most cases, is not sufficient to cover the total income needs during retirement, it is still a benefit that many retirees have come to count on.
It is very simple to become eligible for social security benefits.
You need to accumulate at least forty social security credits during your working life to qualify for the minimum social security income. You can earn a maximum of four credits in a year, and the amount of earned income needed to obtain a social security credit is set each year. For example, in 2011 you need to have at least $1,120 of earned income to obtain one credit.
This makes it fairly easy for most people to obtain the four credits each year and qualify for the minimum social security benefits after 10 years of working.
The amount of social security income a retiree will receive at full retirement age is based on the top 35 years of earnings. The benefit is then reduced or increased according to when you apply. Retirees can apply for social security benefits when they have attained age 62. Unfortunately, by collecting social security income early a retiree settles for a reduced benefit. One way a retiree can maximize their social security income is by simply postponing the application.
Social security benefits at age 62 are roughly 75% of what they would be at Full Retirement age and increase by roughly 8% each year that they are delayed up to the maximum benefit at age 70.
Determining when to collect social security income is a very important decision and there are many factors that should be taken into consideration to maximize social security benefits such as longevity, income needs and survivors needs to name a few. However, by taking the time to understand your social security benefits now, you can make an educated decision when the time comes.
If you need information on social security benefits and how to maximize your social security income there are professionals out there to help you. Simply request a free proposal to see how you can benefit.