Social Security
A US federal program that provides retirement, disability, and survivor benefits funded through payroll taxes, with benefits based on lifetime earnings.
Example
“By delaying Social Security until age 70 instead of 62, he increased his monthly benefit by 76%.”
Memory Tip
Social Security = society's collective SECURITY net for retirement and disability.
Why It Matters
Social Security is crucial for retirement planning because it provides a guaranteed income stream for life that most workers will receive starting at age 62 or later. Understanding how much you will receive helps you plan for other savings and investments needed to maintain your desired lifestyle in retirement.
Common Misconception
Many people believe Social Security will be completely gone or unavailable when they retire, but the program has sufficient funds to pay benefits for decades even without changes. While adjustments may be needed in the future to ensure long-term solvency, benefits are not disappearing for current or near-future retirees.
In Practice
A worker who earned an average salary of 50000 dollars per year and retires at age 67 in 2024 might receive approximately 1800 dollars per month in Social Security benefits, while someone who delayed claiming until age 70 could receive roughly 2200 dollars monthly, receiving about 400 dollars more each month as a reward for waiting.
Etymology
From Latin 'socialis' (allied, united) + 'securitas' (safety). Established by the Social Security Act of 1935.
Common Misspellings
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Related Terms
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See Also
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