As part of my mortgage business I try to share pertinent financial/mortgage info I come across. This one dispelling Social Security myths caught my attention.
Myth: Social Security is on the verge of going broke.
Fact: Even if Congress takes no action, full benefits can continue to be paid until 2041, according to the latest report by the trustees of Social Security. Given the importance of Social Security for so many Americans, it is reasonable to assume that Congress will act before the system runs out of money.
Myth: Your Social Security benefit is based on your income in your last five working years.
Fact: Your benefit is actually based on your income during the 35 years in which you earned the most. Your earnings are first indexed to account for changes in average wages since the year in which you earned the money. Then a formula is applied to calculate your basic benefit or "primary insurance amount" (PIA). If you don't have 35 years of earnings, some years with no earnings will be used to determine the average amount.
Myth: Everyone's normal retirement age is 65.
Fact: For those born in 1937 or earlier, the normal (or full) retirement age is still 65. But it is gradually increasing for workers born after 1937. To learn yours, visit the Social Security Administration's Website, www.ssa.gov. You may elect to begin receiving benefits before you reach your full retirement age, but your monthly payments will be reduced.
Finally, the article indicated that your tax-deferred 401(k) savings will probably be your single largest source of income in retirement, so try to take full advantage of your plan.
2008 SmartMoney, The Wall Street Journal Magazine. Prepared by Custom Solutions from SmartMoney.
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