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Ten Best Practices For $255 Payday Loans Online Same Day

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Social Security Explained

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Social Security Explained
Social Security is a federal program that provides survivors, disability, and retirement benefits to those who qualify.
Written by Cara Smith Lead Writer | Investing, auto loans, cryptocurrency Cara Smith is a lead writer at NerdWallet where she writes about investing, cryptocurrency, and auto loans. She has covered commercial real estate, housing and general business issues for Houston Business Journal, CoStar News as well as other publications. She studied journalism and psychology at The University of Houston, where she was editor-in-chief of its student newspaper. She is based in Chicago where she hunts night and day for authentic Tex-Mex throughout the Midwest.





Sep 14, 2022


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In the past, he worked as a channel manager at MSN.com, as a web manager at the University of California San Diego and as an editor of copy and staff writer at the Los Angeles Times. He holds an undergraduate degree in Arts in communications and an M.A. Arts in Anthropology.







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Social Security is a federal program that pays benefits to eligible residents. The majority of people are aware that Social Security provides retirement benefits, but the program also pays out these benefits, based on your lifetime earnings:
Disability
Survivors
Dependency

Established during the Great Depression (1929-1939), the program was designed to offer financial security to older workers. It's funded through regular payments made by taxpayers throughout their working lives to an unrestricted Social Security fund.
What exactly is Social Security?
Social Security is a program that is administered through the Social Security Administration. It provides financial aid to retired people and their family members, as well as to the children and families that have lost a loved one. Additionally, it provides benefits to disabled people who may be unable to earn a living.
Benefits from Social Security are paid for by tax. Employers and employees pay the 6.2% taxes on earnings, which can amount to $147,000 annually, which helps fund the Social Security program.
For example when an employee earns an annual income of $148,000 in pre-tax income and is not taxed the 6.2% tax on the final one thousand dollars in their income.
Self-employed employees have to pay 12.4% in Social Security taxes.
How much Social Security will I get?
It's not possible to determine your exact benefit size until the time you reach the age of retirement. But on average, most people can anticipate to receive Social Security benefits to replace approximately 40 percent of their salary prior to retirement.
Your benefits will depend on the amount the amount you pay into Social Security throughout your lifetime in addition to how much money you earn throughout your work years. The Social Security Administration that offer a clear picture of potential benefits you could get.
Learn more about the information you'll receive
What is the maximum Social Security benefit?
Here are the highest each month Social Security benefits an individual who will retire in 2022 may get, based upon the date they retire and begin collecting benefits.
62 years old



65 years old



The average age is 67.



70 years old



$2,364 per month.


$2,993 per month.


$3,568 per month.


$4,194 per month.








In order to be eligible for this benefit , you'd have to earn $147,000 annually which is the highest taxable income for Social Security -- for at minimum 35 years. This is because Social Security benefits are calculated on the basis of your highest earning years over the 35 year period.
How is Social Security calculated?
Benefits from Social Security are determined by two aspects:
The age at which you will be when you take your retirement.
Your best 35 years of earnings prior to inflation.

Since the program utilizes the highest earnings for the 35 years over your entire career, those who earn more receive higher Social Security benefits. People with lower earnings or who are away from the workforce will receive lower benefits.
>More: Our free can help you calculate how much you'll need to save
Do Social Security benefits taxable?
Yes, you could be eligible for Social Security retirement and disability benefits could be .
What percentage is determined by how much the amount of your "combined income" -- which includes your benefits as well as wages, interest, dividends and other types of tax-deductible income -- is higher than certain thresholds during a particular year (see tables below). And the majority of people who receive benefits earn much more than that minimum threshold, and end in paying taxes on their benefits.
In actuality, about 56% of the beneficiaries' families are expected to pay tax on their Social Security benefits during the 35-year timeframe from 2015 to 2050, according to an Social Security estimation.
Here's how it breaks down if you file your federal income taxes in the individual category:
Annual gross income between $25,000 and $34,000



Gross income that is greater than $34,000



Up to half of the earnings are taxable.


Up to 85% of your earnings are tax deductible.








Here's the way it works in the event that you jointly file your federal income tax:
Together, gross annual income between $32,000 to $44,000



Together, gross annual income greater than $44,000



A maximum of half of the benefits are tax-deductible.


The majority of your income is tax-deductible.








A beneficiary will not be taxed for more than 15% of their income.
Learn the best way to
When can I begin collecting Social Security?
Workers who were born after 1960 qualify for Social Security benefits at age 62. However the longer you are in the workforce the higher your Social Security benefits will be. This is due to the fact that it is the case that the Social Security Administration considers 67 to be the " " age for people who were born after 1960. Also, those who claim benefits prior to when reaching 67 are eligible to receive reduced benefits.
This could result in significant differences in benefits. For example, according the Social Security Administration, somebody who qualifies for a monthly retirement benefit when they reach 67 would only qualify for a monthly $700 retirement benefit if they retire at age 62.
After the age of 67, however you might want to consider when you retire. Once you reach 67, your Social Security benefits continue increasing until you reach 70. Once you reach the age of 70, the increment of Social Security benefits ceases, even if you want to put off retirement for a longer period.
>> Ready to start your retirement planning? Use to get started
How long do Social Security benefits last?
Social Security retirement benefits don't end; when you begin receiving Social Security payments, you'll continue receiving these benefits for the rest of your life.
There's no expiration date on disability benefits, either. The benefits will be paid for until the qualifying health condition remains, in addition, Social Security will check in regularly to ensure your health condition is still impacting your capacity to work.
Beneficiaries for survivors for the deceased spouse can qualify for retirement benefits as early at age sixty or fifty if they are suffering from a disability. The benefits will be paid out for the rest of the surviving spouse's life, though there are some limitations for divorced spouses.
Children who are receiving Social Security benefits on behalf of a deceased or retired parent, or a parent with a disability will continue to receive benefits until they reach the age of 18. In the case of a child who is in school, they'll usually continue to receive benefits until they complete high school, or for two years after the age of 19.


The author's bio: Cara Smith joined NerdWallet in 2021, after covering business and real estate throughout Houston and Chicago for eight years.







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