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Should You Rely on Social Security?

 Before we discuss the complexities and facts about using Social Security to its fullest extent as perhaps the centerpiece in ones retirement plan, it is important to cut through the hyperbole. Getting down to the facts surrounding the political and financial reality of Social Security’s probability of remaining viable is important for those nearing or already in retirement.

Social Security, a Better Understanding – Top Ten

With so many misnomers about Social Security, let’s list some of the interesting factors.

1. Passed by Congress in 1935 and signed into law by President  Franklin D. Roosevelt.
2. In 1956, it was amended to include disabilities.
3. Eligibility and benefit payout is gender neutral.
4. Additional income earnings at full retirement age (FRA) is allowed with no reduction in benefit.
5. Earning additional income after election at an early retirement age (ERA) is allowed with some reduction in benefit. Benefits reduced by earnings increase future benefits.
6. Same sex marriage partners do not qualify for spousal benefits since they fail the definition of marriage under “The Defense of Marriage Act”.
7. Social Security benefits are officially referred to as “Old Age Benefits”.
8. The retirement income benefit (RIB) is calculated from the primary insurance amount (PIA).
• Thirty five years of the retiree’s highest earnings are added and averaged using an average index monthly earnings (AIME) formula in determining his or her PIA.
• PIA is based on several factors and is calculated to allow you at FRA to receive the full RIB.
• A portion of your retirement income benefit may be taxable based on Provisional Income.
• Single Social Security; Taxed Portion 2010
• 0% up to $25,000 then up to $34,000  50% — $34,001+ 85%
• Joint Social Security; Taxed Portion 2010
• 0% up to $32,000 then up to $44,000  50% — $44,001 + 85%
9. Age sixty two is considered the beginning of one’s early retirement age (ERA). One must accept a discounted or lower retirement income benefit (RIB) for starting benefits early.
10. Age sixty five to sixty seven, depending on when one was born is considered full retirement age (FRA). This is the age where the RIB is paid in full with no discount to the PIA.

To see the rest of this list as well as other additional Social Security information, contact Dick Van Dyke Financial, Ltd. at 217-753-1515 to receive a copy of Dick’s book – “The New Retirement” or you can order a copy online.