As many baby boomers enter their golden years, it becomes imperative to have their finances in order. Much like the preparation for life after college, it is now time to prepare for life after retirement. Social Security is a type of social insurance meant to protect citizens from succumbing to financial troubles from unemployment or underemployment due to age, disability, and other special circumstances.
Funds for Social Security benefits are pulled from federal payroll taxes and are then paid to the citizen when they qualify for benefits under certain criteria. Social Security comes out of the worker’s paycheck and it is paid back to them once they need it due to retirement, disability, or death. If a worker dies before collecting benefits, Social Security is typically paid out to their spouse or family. For very long, the threat of Social Security becoming a thing of the past has been a real threat. The government has had to restructure the program many times to ensure benefits to the current generation of people on SSI, but the future generations may never collect benefits.
The Purpose of Social Security
Social Security is meant to act as the groundwork for financial refuge for millions of people in the United States. SSI benefits are available to retirees, family of retirees, disabled workers, and the families of deceased workers. This social insurance is meant to act as a safety net to those in this population that cannot provide for themselves or their families. However (and unfortunately), many times, disabled workers have to fight just to qualify for the very benefits they (should have) earned, and oftentimes it is better to hire a Social Security law firm.
New SSI Laws
Over the past few months, the debate on Social Security benefits has come to a heated boil. The government just recently made last minute changes to payroll taxes to keep funding SSI in the latest fiscal cliff deal. As MSN Money points out, the passed rate increase of 1.7% in issued benefits pales in comparison of the 3.6% cost of living increase retirees received in 2012. Another major change is to the earning cap; for people who turn 66 in 2013 the earning limits will be $40,080, after which $1 of every $3 earned will be withheld.
How to Protect Yourself
Since Social Security is not something you can currently (and will probably never be able to) opt out of, there is not much you can do as a civilian when it comes to SSI laws and benefits. The best way to plan for your future is to take matters into your own hands and start saving for retirement as soon as possible. Many employers offer savings programs like a 401K, which deducts a percentage of your check, pre-taxes, and collects interest over time. Other alternatives include high interest savings accounts from credit unions and private financial institutions.
If you are wondering how much you need to save for retirement, that can be a tricky question to answer; everyone will need to save a different amount based on his or her individual expenses. A recent article on Time.com explains why people need to save different amounts and offers resources for determining your individual retirement needs. If retirement is not why you count on SSI and your need is related to a disability, the best option is to purchase a privately held disability insurance plan that will protect you and your family if the situation arises.
Article Written by SimplyLili
SimplyLili is a PhD student in Social Psychology, and the witty author of Essell Magazine; created to disperse knowledge on a plethora of psychological topics in a minimalist and relevant way. She is a self-proclaimed nerd, and her 3 fave things are blogging, rainy days, and pugs.