The technical definition of social security is “any government system that provides monetary assistance to people with an inadequate or no income.” However, in the US people colloquially use the term to refer to the federal Old-Age, Survivors and Disability insurance program which provides benefits to retired people and those who are unemployed or disabled.
In 1935, the Social Security Act was established as a financial safety net for older Americans. Before that, support for the elderly wasn’t a federal concern. It mostly fell to states, towns and families. The program is based on contributions that workers make into the system. While you’re employed, you pay into Social Security and receive benefits when you retire. Contributions take the form of the Federal Insurance Contributions Act (FICA) taxes that are withheld from most paychecks. Medicare benefits are commonly considered part of Social Security benefits, although technically Medicare has a separate program. Medicare contributions are withheld from your paycheck in much the same way as your Social Security contributions. FICA taxes support Social Security and Medicare.
Disability and survivor benefits are included in the Social Security program. Contributions you make provide insurance in the event you become disabled. Assuming you worked enough to qualify for retirement benefits, your spouse and children can receive Social Security survivor benefits after your death.
As of this writing, the earliest you can start collecting Social Security retirement benefits is age 62. The latest is age 70. Exactly when you start collecting payouts in that eight-year span is up to you. Your actual retirement date doesn’t matter either. You can retire before 62 and you can retire after 70. Either way, you can take benefits whenever you choose between those ages. Generally speaking however, taking benefits later is better, although everyone’s situation is different.
Regardless of whether you take Social Security benefits early, late or some time in between, Eunoia works with you to figure out the “best” time for you to take benefits based on your own personal situation and goals.
Contact Eunoia Financial to learn more about what we can accomplish together