For some households, it makes sense for a worker to start reduced retirement benefits early in order to permit other family members to immediately start collecting Social Security benefits on the workerâs earnings record.
Social Security is a key source of financial support, and keeping track of the changes that happen with the program each year is crucial in order to plan your financial future. Keep these facts in mind, and you'll be better prepared to hit the ground running in 2018.
Social Security is a pay-as-you-go system, and that means that the payroll tax you pay today covers the cost of current Social Security recipient's benefits, not your future benefit. While Social Security accounts for 90% or more of income for about one quarter of married retirees, the system was never meant to provide the lion's share of a retired couple's income. Instead, Social Security is supposed to act as a safety net. As such, it replaces about 40% of the average recipient's pre-retirement income. How's it calculated. Now that we've covered those points, let's dig into the calculation Social Security uses to determine how much money you can receive in benefits in ...