The Social Security website is where it's at!
Ok so I'm minding my business when I come across something that really stinks like spam in my inbox.
What is Social Security anyway?
The government takes your money for federal taxes, medicare, social security, and a plethora of other things. Or should I say, it divides up the money it takes into those separate line items on your check even though I suspect it all goes into the same pot afterwards. Social Security (SS) is theoretically the money you have paid to the SS line item on your tax return which is being held by the government for the retirement of citizens. See what happened there? It immediately becomes not your money. It also is a long winded way of saying SS is an over-spending under-funding 100% typical government-run institution. Here is what the Social Security site had to say about it:
"every year, the government-appointed Board of Trustees releases a report on the financial outlook for the Social Security and Medicare Trust Funds. The Trustees released the 2016 Trustees Report on June 22, 2016. It reported:
The combined trust fund reserves are still growing and will continue to do so through 2019. Beginning with 2020, the cost of the program is projected to exceed income.
The projected point at which the combined trust fund reserves will become depleted, if Congress does not act before then, comes in 2034 – the same as projected last year. At that time, there will be sufficient income coming in to pay 79 percent of scheduled benefits.
The projected actuarial deficit over the 75-year long-range period is 2.66 percent of taxable payroll -- 0.02 percentage point smaller than in last year's report."
Alright well that's pretty bleak for anybody in their 30's and younger. To summarize:
They will take more money from you than they give back
Big surprise I know. Ok now to the cool part:
You can see above that you receive different benefit amounts based on when you retire. The above are estimates based on my own numbers, but they will handily illustrate my talking point. I say retire as soon as possible and start collecting. For the 5 years between 62 and 67 you will have made (1700*5*12)=$102,000. If you retired at 67 and tried to make up that defecit it would take until you were 67+102,000/(2500-1700)/12 = 77.6 years old to make up the difference. That is to say it would take 10+ years to get the same amount of money. I believe that it is foolish to waste years and money later in life, so don't assume you will be alive for that long. Even if you don't want or need the money take it an invest it, I guarantee you will do better things with it than the Social Security Administration (SSA) will. The only time waiting would be feasible is if you have somehow convinced yourself that you will live an incredibly long time, and I am at a loss as to how somebody who is financially savvy would do that, because the older you get the more you realize that sh!t happens.
There is more neat stuff that I hope you never have to utilize such as disability and survivor benefits. If you become disabled, you start to get a check. The amount is shown here. I personally know quite a few people who are legally disabled but who in reality appear fully capable of working. If you have any people in your life who live easy and take advantage of the system, how these people get their check is no longer a complete mystery. It is not all wellfare! It's disability too! Here is yet another reason why SS is going to dwindle out before you can collect anything: very weak and loophole-friendly disability requirements abound in this country.
Your survivor benefits are also woth checking out. I would liken them to life insurance payable to your loved ones based on your date of death. I won't go into the details, but it may be prudent of you to educate your children and spouse about this so they don't leave money on the table if you pass away.
Now probably the coolest feature of the site which may benefit you at some point:
This administration tracks your tax returns through your social security number, and can paint a vivid picture of how your income is progressing as you live life. I graduated high school in 2002, and was working at Safeway in 2001 so my history goes all the way back to my very first tax return in 2001! WAY RAD! Also it's interesting to see how little I lived on in my college years and I was quite happy. Except for the part where I was living in the ghetto of San Jose with a ton of drug addicts and disability recipients. Besides that I was stoked.
In conclusion I fully encourage everybody to create and verify your social security account online. They will have tracked your income from right when you started working all the way to now, and it is quite interesting to see how things have progressed in your financial life using the government's own metrics. I will caution you again to view the projected retirement income page with skepticism at best, and please don't count on the SSA to be your golden parachute when you turn 62. Golden parachutes don't exist any more in the wild, you have to build them yourself; it takes hard work, knowledge, and dedication. Now go out there and get started.