One of the most large-scale and popular benefits programs run by the U.S. government is Social Security—yet few people really understand just what it is or the nuts and bolts of how it works.
In short, Social Security is a benefits program the federal government provides to eligible individuals that pays monthly benefits to retirees, older workers who meet certain income or age requirements, the disabled and their dependents, and the family of retired or deceased workers.
The Social Security Act was signed into law on August 14, 1935, by President Franklin D. Roosevelt. The program has been modified over the years, but the goal has remained the same: to provide financial support and security to eligible Americans.
Social Security was never designed to be the sole source of income for retirees. However, today so many seniors don’t receive pensions from their jobs and have little savings due to the economy or to lack of employment, Social Security has become a much bigger part of retirement income than it was intended to be. The reality today is that for a growing number of seniors, Social Security benefits actually represent as much as 90 percent or more of what they have to live on after they stop working.
Therefore, the stakes are high when it comes to understanding how Social Security works, deciding when to apply for benefits, and knowing whether your benefits can realistically sustain you through your retirement years.
How This Book Is Organized
Here’s an overview of what you’ll find in this book:
Part 1, Welcome to Social Security, lays the groundwork, beginning with how and why Social Security was established and how regulations have changed over the years. We explain how Social Security is set up, who pays for it, and what determines the amount of monthly benefits you’ll collect. From there, we discuss who qualifies for Social Security and how it ties in to disability benefits. We also address the importance of protecting your Social Security card and number, handling identity theft, and replacing a lost card.
Part 2, Filing for Social Security, is where we tackle the most frequently asked question about Social Security: “When should I file?” You’ll learn how to read and understand your earnings statement, upon which the Social Security Administration calculates your benefits. We’ll also discuss the pros and cons of filing early, waiting until your full retirement age, or postponing benefits until you turn 70.
Part 3, Benefits for All, discusses the benefits packages for just about anyone who needs financial help to survive. You’ll learn about the qualifications for the two programs that help the disabled. You’ll also learn how to file an appeal if your disability claim is denied. We’ll explore how divorce can impact eligibility for Social Security benefits. Finally, we’ll discuss medical issues and how to apply for Medicare or Medicaid.
Part 4, Living with Social Security, ponders whether you can realistically live on just your monthly Social Security benefit check. You’ll learn the best places to live if you don’t want to have to pay state taxes on your benefits, as well as some of the most affordable countries and communities for those on fixed or lower incomes. There’s also a chapter about continuing to work or returning to the workforce and how that could impact your Social Security benefits.
Part 5, Safeguarding Your Future will help you prepare for your financial future, especially if you still have some time before you retire. We’ll discuss how to consider ahead of time how you want to spend the rest of your life and then what steps to take to fund that lifestyle. We’ll also look at many proposed changes to the Social Security program that could ensure its existence for future generations.
Finally, the appendixes include a glossary of terms and a list of additional readings and resources, including helpful websites that will further guide you along your way.
Extras
Throughout this book, you’ll also find sidebars filled with extra tips, definitions of terms, warnings, and valuable quotations that we feel deserve special attention.
DEFINITION
These sidebars define and explain key terms to further your understanding of how Social Security works.
WORTH NOTING
Here you’ll find additional key information that will help you navigate your way through the system.
CAUTION
These sidebars offer warnings about potential problems or mistakes to be aware of on your journey through the Social Security process.
QUOTATION
These sidebars share direct quotes from experts and real-life retirees related to various aspects of Social Security.
Acknowledgments
We would like to thank all the financial advisors, retirement consultants, and other individuals—whether named or anonymous—who provided us with information, anecdotes, or examples through email communications or interviews, as well as the secondary sources and websites cited throughout the book. We want to thank Bob Diforio of D4EO Literary Agency for recommending us to write this book, as well as acquisitions editor Janette Lynn and development editor John Etchison at Alpha Books, whose editorial and production skills helped bring this project to fruition.
Trademarks
All terms mentioned in this book that are known to be or are suspected of being trademarks or service marks have been appropriately capitalized. Alpha Books and Penguin Group (USA) Inc. cannot attest to the accuracy of this information. Use of a term in this book should not be regarded as affecting the validity of any trademark or service mark.