Social Security happens to be the medium for American citizens that can make or break their financial future. In short, this sector is the ultimate path to compiling a successful financial plan that provides aid to citizens who are disabled, retired, and/or survivors of deceased workers. It’s managed by the Social Security Administration (SSA).
When it was first introduced in 1935, no one thought it would be such an important part of the system today. Back then, its purpose was to provide a safety net for people who were unable to accumulate adequate retirement savings. Consequently, people did not give it much thought, mostly because of shorter lifespans and existing pension plans.
However, as per sources, in 2025, bodywork will play a vital role in helping retired people save for the next coming years to lead a comfortable life. Moreover, given today’s lifespan and unexpected situations, it is more important than ever to maximize your Social Security checks and maximize its benefits. As of April 2024, the average Social Security check for retired workers was $1,920.48.
For instance, the SSA takes your 35 highest-earning years, adjusts them, and calculates your benefits using an Average Indexed Monthly Earnings (AIME) formula. However, if you had gaps in your employment history, those years will be counted as zero. However, once you reach 35 years of work, every additional year with earnings replaces a lower-earning year, potentially boosting your benefits.
Likewise, a person’s social security benefits are directly tied to their earnings. So the tighter your salary, the higher your benefits will be. Some people approaching retirement may seek to boost their income by taking on part-time work or generating business revenue. But, this, in return, can reduce their work hours or be considered semi-retirement, which can reduce the benefits.
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“Income earned after age 60 isn’t indexed, meaning that earnings in your 60s can replace years with zero income or lower earnings,” says Marguerita Cheng, CFP, CRPC, RICP, CSRIC, CEO of Blue Ocean Global Wealth in Gaithersburg, Maryland.
Meanwhile, even though the official retirement age in America is 66, people who stay up to 70 have the advantage of an 8% annual return on their benefit amount. Your benefits increase by 8% each year thanks to delayed retirement credits.
Furthermore, those old couples born before January 2, 1954, who have reached their retirement age can claim spousal benefits and draw money from their spouse’s work record while letting their benefits grow. Again, If you plan to supplement your Social Security income by working after retirement, be mindful of the tax implications.
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Between 50% and 85% of your benefits may be subject to federal taxes. A good way to avoid this is by rolling your income across various sources to avoid skyrocketing taxes. Also, social security rules are subject to change from next month. American citizens will see some updated social security requirements that would affect the amount of the check or even prevent them from collecting the monthly benefit if they aren’t followed.
As the tax-paying deadline ends on April 15, 2025, this season will mark a hectic time before the end of its monetary terms; it is incredibly important to take note of all the changes, read the rules, and not be afraid to reach out to the SSA authorities for further assistance.
Be mindful of scam callers and hackers trying to seek information from people to churn out money. Tax frauds have become increasingly common in recent weeks, owing to the nearing tax-paying deadlines. Pay your taxes on time and before helping others, look out for your interest and safety.
