Social Security

Your Social Security benefits are the foundation upon which you can build a secure retirement.  Social Security is funded by payroll taxes; that is, a percentage of your paycheck goes directly into the Social Security fund to help provide benefits to current Social Security benefit recipients.  SMU also pays a portion of the Social Security tax.

How Much Will I Get From Social Security?

As you make plans for your retirement, there are several ways you can find out how much you can expect to receive when you apply for Social Security benefits. Your Social Security Statement provides an estimate of your future Social Security benefits (under current law) and a record of your earnings.  Currently, Social Security Administration (SSA) sends a paper statement to individuals on their 25th birthday and annual paper statements to individuals over age 60 who are not yet receiving Social Security benefits. A few years ago, SSA stopped sending annual paper statements to everyone else due to budget cuts.  To see your statement, go to www.socialsecurity.gov.  Click on "My Social Security" and create an account.

You can also use the Social Security Retirement Estimator to determine how much you might receive.

Many people wonder how their benefit is determined.  Social Security benefits are based on your lifetime earnings.  Your actual earnings are adjusted or "indexed" to account for changes in average wages since the year the earnings were received.  Then Social Security calculates your average indexed monthly earnings during the 35 years in which you earned the most.  A formula is applied to these earnings to arrive at your basic benefit, or "primary insurance amount" (PIA).  This is how much you would receive at your full retirement age - 65 or older, depending on your date of birth.  Visit the Social Security Retirement Estimator to estimate your Social Security benefit.

When Should I Begin Receiving Social Security Benefits?

Taking Social Security as soon as you're eligible is tempting. After all, you've likely been paying taxes into the system for your entire working life, and you're ready to receive your benefits.  But there’s a trade-off. Claiming your retirement benefit when you turn 62 can be a pretty costly decision. Some of the costs are associated with the rules of the program and others with retirement planning in general, so it’s important to understand them fully.  If you can afford it, waiting is often the better option.  You want to evaluate your decision on when to take Social Security based on how much you've saved for retirement and your other sources of income. This article might help with your decision.

Social Security Resources

Click on http://www.ssa.gov/onlineservices for important information on how to register for on-line access to important Social Security information and services.

• How Social Security Benefits are Calculated
• Social Security Retirement Estimator
• Understanding Social Security
• When to Start Receiving Social Security Benefits