How Social Security Helps the Average American Worker
One of the most important programs of the government is Social Security. With the help of Social Security, beneficiaries receive monthly payments depending on their situation and these include Supplement Security Income or SSI and retirement benefits. Ideally, it should not take away from Medicare.
However, most working Americans and unfortunately some retirees do not know how important this program is to their financial health. So, it’s important not to take Social Security for granted.
Here are some of the reasons why Americans should appreciate the Social Security program.
Qualification for Retirement Benefits Are Easily Met
It’s worth noting that it only takes 10 years of part-time work to be eligible for retirement benefits. Contrary to popular belief, Social Security is NOT an entitlement program. It is not something you acquire at birth. People have to earn them. But it’s easy for the average American to meet the requirements to receive these benefits.
To qualify, you will need 40 lifetime work credits and you can earn a maximum of 4 credits per year. That means if you get the maximum 4 credits per year, by the 10th year that you are working, you are eligible for retirement benefits.
In 2018, you get 1 work credit for a $1,320 income so if you earn $5,280 in the next year, you will max out your annual work credits. Many people achieve this amount even in just part-time jobs. It is not a very big burden.
However, the length of your work and earnings history are important factors in the calculation of your retirement benefits. To maximize it, it’s a good idea to work a minimum of 35 years.
It’s a Guaranteed Retirement Income
No matter how asset reserves are expected to depreciate as the years go by, Social Security is guaranteed to be provided for retirees. This is because payroll taxes from workers’ income make up more than 87% of the program’s revenues. So, as long as Americans keep working, there will always be money to be collected to be distributed to retirement beneficiaries.
There is the possibility of retirement cuts at some point, especially with how the current government is making changes, but you can count on receiving a payout once you enroll for benefits.
All Workers Are Protected in Case of Disability
The program also offer protection to the majority of today’s working class in case they become disabled. About 90% of today’s workers from the age of 21 to 64 have disability protection in case they incur a long-term disability.
For those who have 40 lifetime work credits, they will quality for disability benefits. If you don’t meet this requirement, there is a staggered lifetime credit total based on your age that you can use to qualify.
It Puts Senior Citizens Out of Poverty
There are over 42 million retirees who receive benefits each month. Although this doesn’t seem like a big number, it’s enough to put approximately 1/3 of elderly recipients out of poverty.
In 2015, the elderly poverty rate was 8.8% and without Social Security income, this number would have jumped to 40.5%. That is 32% higher.
Social Security Can Protect Your Loved Ones
Above all, Social Security is not just to provide retirees with a lifetime compensation. It can also provide income to your loved ones.
2.4 million spouses today and 664,000 children are receiving benefits based on the earnings of a primary worker. Even ex-spouses may be eligible to receive spousal benefits. These spouses and children don’t necessarily reduce the monthly payout given to the primary worker so it’s an ideal scenario for everyone.
