If you are going to receive your first Social Security check, here are a few things you must consider beforehand. Many Americans think that once they start receiving the monthly benefits, their financial challenges will be over. However, the reality is far from the expectation.
The benefits are significantly lower than what you earned from your previous jobs. So, if you are someone solely relying on monthly checks to cover your expenses, you should think twice.
Starting in June, the monthly benefit for retired workers could exceed $2,000, something that would be the first since the inception of the Social Security Administration (SSA) in 1935. In the past 90 years, Social Security has lent a solid hand to support the finances of American retirees, people with disabilities, survivors, or deceased workers.
However, the benefits wouldn’t suffice if you are trying to live entirely off them. According to The Mirror US, Social Security benefits could only cover 40% of earnings. Notably, this could significantly decrease depending on the potential benefit cuts. As you grow old, some expenses could be dropped but replaced by new ones, such as home repairs, health care, entertainment, etc.
Experts warned about three main factors that you should consider before you receive your first check: Your work history, your earnings history, and, of course, your claiming age.
All three of these factors could heavily impact the benefits and any potential cuts. Calculating these beforehand could save you time and hassle and prevent you from keeping false expectations.
For instance, SSA claims that when you apply for benefits late, there’s a higher chance of a lifetime benefit. Applying as early as 62 could affect your finances. However, it is ultimately up to you. The agency also has a tool that you can use to evaluate all options before you jump in.
Supplemental Security Income (SSI) pays monthly financial assistance for people who have limited income and resources and are blind, disabled, or 65 or older.
— Social Security (@SocialSecurity) August 16, 2021
Let’s talk about your work history and earnings. As stated by SSA, your benefits are calculated based on what you earned from your top 35 working years. Now, if you have some low-income years, it could negatively impact your checks, so it’s recommended that you work for at least 35 years. If you keep your employment beyond these years, you could enjoy potentially higher benefits.
There are more ways to positively impact your Social Security benefits. For instance, The Motley Fool, a private financial and investing advisory firm, advises that you should make a regular contribution to a retirement savings plan. It can range from as little as $50 to as much as $250.
This would not only allow you to adequately cover your expenses without depending on your monthly checks but also maximize the benefits you are receiving from Social Security.
