02: What about Social Security?

We can just see you wiping the sweat off your forehead and asking the almost rhetorical question, "What about Social Security?" We'll answer that with another question: What about it?! Social Security was never meant for you to depend upon, even though it is still a good (if not great) system to supplement your monthly income during the biggest holiday of your lifetime. In other words, Social Security, pensions, and retirement accounts will have to work jointly to help you amass the assets necessary to provide income security in retirement without burdening the future generation.

So when it comes down to it, paying your Social Security taxes for at least forty quarters of your working life was really a good idea after all. Well, after all that moaning and groaning, now is the time to reap the benefits.

This pocket money retirement program, formally called the Federal Old-Age and Survivors Insurance Trust Fund and the Federal Disability Insurance Trust Fund program (OASDI), is meant to provide a lifetime monthly income for qualified workers that have reached their full retirement age (usually ranging from 65 to 67, but depending upon your country of residence). The sum of retirement benefits you receive is determined by your income while working. You also have the option of receiving a lower monthly income starting at age 62 as the Social Security Administration reduces your monthly benefits by the number of months prior to your full retirement age. If this is what you plan on doing, schedule an appointment or apply online for the benefits three months prior to your 62 nd birthday if you are in a hurry to apply. Perhaps you would even be able to receive more money in the long run by drawing Social Security between age 62 and your full retirement age than you will by waiting! This is probably a good idea if you think you're going to drop dead soon!

If you want your Social Security benefits to increase manifold, you may also opt for a second career- which can be either part-time or full-time. This would boost your Social Security benefits provided that your earnings on the second job are as high as or higher than your previous earnings. Remember that to calculate the amount of your monthly benefit, the Social Security Administration looks back over your entire work history and earnings. The agency then picks the 35 years in which you earned the most. Thus, if the amount you earned on your second job last year is greater than the amount you earned in one of those 35 years, after adjusting for inflation, your benefit would go up.

Many ignorant people assume that the Supplemental Security Income (SSI) program is a part of Social Security. It is, in fact, not a part of Social Security although the Social Security Administration does administer the SSI system. The program is paid for with general tax revenues instead of the Social Security payroll taxes. SSI can help you if you are at least 65 years of age and require cash to meet basic needs for food, shelter, and clothing.

Also contrary to many people's false belief, Medicare is not a part of Social Security either. Sure, it is a federal program that helps to pay for older Americans' health costs while the taxes financing part of Medicare are lumped in with those that pay for Social Security. Then again, Medicare is also financed by premiums and general revenue. It is not administered by the Social Security Administration, so don't be calling the Social Security folks for more and more information on this program. (They might just cut your Social Security benefits by half if you do! Yes, that was us making a corny joke)!

Based on your work record, your spouse, dependent children, and even your ex-spouse can get Social Security benefits that are up to 50% of your own monthly benefits. Moreover, as soon as you bite the dust (peacefully!) your spouse and dependent children (under 18) will begin to receive monthly benefits - because as a worker you were paying into the Old-Age and Survivors Insurance (OASI) Trust Fund along with your employer - And you didn't even know it. Aren't surprises just the most fun things ever?!