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WiregrassSeniorsMagazine . com
Social Security Tips
3 Social Security Questions You Need to Be Able to Answer Most Americans will collect Social Security ( SS ) benefits at some point in their lives , but there are many things you need to know .
There are important questions Americans need to know the answers to before they retire , in order to help make smart retirement-planning decisions . So let ' s take a look at a few common Social Security misconceptions , and the truth behind each one .
1 . How much of your living expenses will Social Security cover ? According to a SS survey by Nationwide Retirement Institute , recent retirees anticipate paying 59 % of their living expenses in retirement with their SS benefits .
In reality , SS is designed to replace just 40 % of the average retiree ' s income . Since most experts suggest that retirees will need 80 % ( or more ) of their pre-retirement earnings for a comfortable retirement , this implies that SS will cover half of the average retiree ' s expenses . So it ' s fair to say that many future retirees have an optimistic expectation for their SS income .
2 . Will Social Security run out of money ? Nationwide ' s survey also found that 78 % of future retirees are worried about SSs funding running out .
Let ' s set the record straight . First of all , there ' s some truth to the belief that SS isn ' t exactly in the best financial shape . While the program has more than $ 2.8 trillion in reserves right now and is forecast to run a surplus for the next few years , the ongoing retirement of the baby boomer generation is expected to deplete the program ' s reserves by 2034 .
However , even if that were to happen , SS ' s incoming payroll taxes would still be enough to cover more than three-fourths of benefits . In addition , any type of benefit cuts to SS are extremely unpopular , and if history is any indicator , something will be done to fix the problem before mandatory across-the-board cuts will become necessary in 17 years . Cross your fingers .
3 . Can you work and collect Social Security at the same time ? SS benefits are restricted by the " earnings test ," but many Americans don ' t realize that this only applies to people who have not yet reached full retirement age .
For a little more clarification , when it comes to working and collecting SS at the same time , the Social Security Administration effectively splits beneficiaries into three groups .
Beneficiaries who will reach their full retirement age after the current calendar year have the strictest limitation . For 2017 , their Social Security benefits are reduced by $ 1 for every $ 2 they earn in excess of $ 16,920 for the year , or $ 1,410 per month .
Next , Social Security recipients who will reach their full retirement age during the current calendar year are subject to the earnings test , but a much more generous version . This group can earn up to $ 3,740 per month , and excess earnings only reduce the benefit by $ 1 for every $ 3 over the threshold . Only the months before full retirement age will be reached are considered for this test .
Finally , Social Security recipients who have already reached full retirement age have no limitation whatsoever on the amount of money they can earn . Their Social Security benefit will not be reduced as a result of their earnings .