myths and facts about social security
DESCRIPTION
Social Security retirement benefits are certainly important, accounting for about one third of one’s income in retirement. However, Social Security is not very well understood. It was originally created with the intent to be one of the three legs of retirement income, company pension and private savings being the other two legs. Now that company pensions are almost non-existent, the rest of the retirement income has to come from one’s savings during their working lives. This is not easy, and requires comprehensive financial planning to get it right. Please read on…TRANSCRIPT
Dolf Dunn Wealth Management, LLCDolf Dunn, CPA/PFS,CFP®,CPWA®,CDFA
Private Wealth Manager11330 Vanstory Drive
Suite 101Huntersville, NC 28078
Myths and Facts about Social Security
March 04, 2013
Myth: Social Security will providemost of the income you need inretirement.Fact: It's likely that Social Security will provide asmaller portion of retirement income than you expect.
There's no doubt about it--Social Security is animportant source of retirement income for mostAmericans. According to the Social SecurityAdministration, more than nine out of ten individualsage 65 and older receive Social Security benefits.
But it may be unwise to rely too heavily on SocialSecurity, because to keep the system solvent, somechanges will have to be made to it. The younger andwealthier you are, the more likely these changes willaffect you. But whether retirement is years away orjust around the corner, keep in mind that SocialSecurity was never meant to be the sole source ofincome for retirees. As President Dwight D.Eisenhower said, "The system is not intended as asubstitute for private savings, pension plans, andinsurance protection. It is, rather, intended as thefoundation upon which these other forms of protectioncan be soundly built."
No matter what the future holds for Social Security,focus on saving as much for retirement as possible.You can do so by contributing to tax-deferred vehiclessuch as IRAs, 401(k)s, and otheremployer-sponsored plans, and by investing instocks, bonds, and mutual funds. When combinedwith your future Social Security benefits, yourretirement savings and pension benefits can helpensure that you'll have enough income to see youthrough retirement.
Myth: Social Security is only aretirement program.Fact: Social Security also offers disability andsurvivor's benefits.
With all the focus on retirement benefits, it's easy tooverlook the fact that Social Security also offers
protection against long-term disability. And when youreceive retirement or disability benefits, your familymembers may be eligible to receive benefits, too.
Another valuable source of support for your family isSocial Security survivor's insurance. If you were todie, certain members of your family, including yourspouse, children, and dependent parents, may beeligible for monthly survivor's benefits that can helpreplace lost income.
For specific information about the benefits you andyour family members may receive, visit the SSA'swebsite at www.socialsecurity.gov, or call800-772-1213 if you have questions.
Major Sources of Retirement Income
Note: Data may not total 100% due to rounding.
Source: Fast Facts & Figures About Social Security,2012, Social Security Administration
Myth: If you earn money after youretire, you'll lose your Social Securitybenefit.Fact: Money you earn after you retire will only affectyour Social Security benefit if you're under fullretirement age.
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Prepared by Broadridge Investor Communication Solutions, Inc. Copyright 2013
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for anyindividual. To determine which investment(s) may be appropriate for you, consult your financial advisor prior to investing. All performancereferenced is historical and is no guarantee of future results. All indices are unmanaged and cannot be invested into directly.
The tax information provided is not intended to be a substitute for specific individualized tax planning advice. We suggest that you consult with aqualified tax advisor.
Securities offered through LPL Financial, Member FINRA/SIPC
Once you reach full retirement age, you can earn asmuch as you want without affecting your SocialSecurity retirement benefit. But if you're under fullretirement age, any income that you earn may affectthe amount of benefit you receive:
• If you're under full retirement age, $1 in benefitswill be deducted for every $2 you earn above acertain annual limit. For 2013, that limit is $15,120.
• In the year you reach full retirement age, $1 inbenefits will be deducted for every $3 you earnabove a certain annual limit until the month youreach full retirement age. If you reach fullretirement age in 2013, that limit is $40,080.
Myth: Social Security benefits are nottaxable.Fact: You may have to pay taxes on your SocialSecurity benefits if you have other income.
If the only income you had during the year was SocialSecurity income, then your benefit generally isn'ttaxable. But if you earned income during the year(either from a job or from self-employment) or hadsubstantial investment income, then you might haveto pay federal income tax on a portion of your benefit.Up to 85% of your benefit may be taxable, dependingon your tax filing status (e.g., single, married filingjointly) and the total amount of income you have.
For more information on this subject, see IRSPublication 915, Social Security and EquivalentRailroad Retirement Benefits.
What Is Your Full Retirement Age?
If you were born in: Your full retirement age is:
1943-1954 66
1955 66 and 2 months
1956 66 and 4 months
1957 66 and 6 months
1958 66 and 8 months
1959 66 and 10 months
1960 and later 67
Note: If you were born on January 1 of any year, referto the previous year to determine your full retirementage.
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