Social Security is a vital program in the United States that helps retirees and their families financially. So, it’s important to know how Social Security works, as well as how it can help you plan for your retirement and provide an income in your retirement years.
A brief history of Social Security
The U.S. Social Security Administration was established by an act of Congress in 1935. It is responsible for administering the Social Security program. The purpose of this Act was to provide monetary assistance to people who are retired, have a disability or are acting as the surviving family member of somebody who has died.
How do I decide when to claim Social Security benefits?
It’s important that you understand how claiming your Social Security benefit impacts the amount of money you will receive. If you begin receiving benefits before your full retirement age, your monthly payment will be reduced.
What is the full retirement age (FRA)?
Full retirement age is the age at which you are eligible to receive your full Social Security benefit. This age is determined by your birth year and can be found by contacting the SSA directly. Full retirement age varies depending on when you were born, but it’s typically between 66 and 67 years old.
How do I calculate Social Security benefits?
Social Security benefits are calculated based on your highest 35 years of earnings during your eligible employment periods. Your ‘benefit computation’ is determined by averaging your monthly income over your 35 highest-earning years to arrive at a figure referred to as an average indexed monthly earnings (AIME) amount.