Social Security

The Social Security program was signed into law in 1935 as a financial safety net for retirees.  It was never intended to replace pensions or personal savings as sources of retirement income, yet today for many Americans it has become their single source of income. 

Workers under Social Security contribute, along with their employer(s), 12.4% of their annual income to a maximum of $132,900 for 2019.  Add to this Medicare contribution rates of 1.45% each, for a total of 2.9%, meaning working Americans are contributing 15.3% of their annual incomes to FICA and most will do so over their entire working years. 

The key to a financially secure retirement is having a guaranteed income that cannot be outlived.  There are three common sources of guaranteed retirement income; Social Security, pensions and income annuities.  Other sources of retirement income can be unpredictable for a variety of reasons including the economy and changes in tax rates.

For individuals retiring at full retirement age (67) in 2019, the maximum monthly Social Security income benefit is $2,861. That means a dual income couple with similar earnings could have a joint income from Social Security of $5,722 monthly or $68,664 per year.  For 2919 Social Security provided a 2.8% cost-of-living adjustment.  To put the value of Social Security in perspective, a couple would need an account value $1,716,600 at a 4% return to match this initial income level. 

Before beginning to receive Social Security income benefits Americans should consider:

  • At what age should benefits begin – the options are between ages 62 and 70?
  • How will Social Security income be taxed?
  • Should one begin receiving SS benefits before taking withdrawals from 401(k) or IRA accounts?
  • What happens to Social Security income when the 1st spouse passes?
  • What difference does it make if the Social Security recipient is single or married?
  • How does Social Security factor into one's overall financial planning?

It is reported that the single biggest mistake Americans make is to begin receiving income at age 62 thinking Social Security will run out of money. The Government has made changes to insure the health of Social Security and there are minor changes that can further safeguard the program.  To view your Social Security retirement income projections, use the link below.

View my Social Security Retirement Income Projections


Social Security fact Sheet

SS Fact Sheet (pdf)