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What Really Is Social Security???

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YOCG Tuesday 8 2 16 CanvaWhat Really is Social Security?

I get asked this question A LOT! Especially from people under 50 or so who hear all kinds of doom and gloom about it.  I’ll explain a few things about Social Security and hopefully, this will put some people at ease about it and maybe get you excited about it as I am!

Social Security is, very simply, a trust fund.  It takes money in when people work and pays out to the same people when they stop working. 

Having said that, it is way more complicated in how it pays it out then in how it takes it in. 

Taking it in……

Very simply, when you get paid, you contribute to Social Security.  That money goes into the trust find (not the Government as some people think) and is invested and managed so that it grows.

Paying it out…..

It can be very complicated calculating how it is paid out but it can be simplified for most situations. 

We all get an amount based on what we paid in but we have choices about when we want it paid to us.  Those choices dictate how much we get.  The longer we delay our payment start the more we get.

YOCG 8 3 16 CanvaSocial Security has a date that is called Full Retirement Age (FRA).  In may of our cases, it is going to be around 65-66.  Your monthly payment is based in your FRA.  If we start our payments sooner, at approximately age 62 (early retirement), we will get less per month.  If we delay our payments until we are 70 we get more per month.  BUT…here is the trick….it is not an all or nothing calculation.  We can choose to start payments anytime after approx. age 62 and get increased payments based on how many months we waited to start the payments.  Starting payments at age 63 gets us more money then starting at 62. 

So now that we have discussed what Social Security really is, lets discuss two of the issues around it that I hear about most……

Social Security is going away.

I hear this all the time.  Lets clear this up right now. NO!  No matter what you hear it’s not going away and I’ll tell you why.  Its a trust fund and its managed so that it does not go away.  Sure some things have to change to keep it going but those changes will be made and it will keep going. 

Here are some things that they could do….

  • Make early retirement a higher age, say 63 or 64 before you can start payments.
  • Make Full Retirement Age 67-68

There are a a lot of other things  that can be done and will be done so don’t worry, it’s here to stay.

Social Security costs me money from my check each week.

Thursday 8 4 16 CanvaSocial Security is not a cost, its a savings plan.  Its the best savings plan out there.  You contribute money into it your whole working life.  When you retire, it pays you an income for the rest of your life.  You can’t loose your money and it forces you to save for retirement.  In addition, if you become disabled it pays you when your disability starts.  If you die, it pays your loved ones.

I hope this helps simplify and clarify what Social Security is all about.  If you have any questions, please reach out to me. If I don’t have the answer I can get it very quickly.

I hope your having a great summer!

Do you more questions about Social Security?  I can help!  Contact Dave, Your ObamaCare Guy for more information at: (813) 391-3448 or email me at dave@YourObamacareGuy.com.

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