Social Security is a simple concept. As you work, you pay taxes to the government. When you retire or become disabled, you receive monthly benefits based on your reported earnings. In the event of your unexpected death, your spouse and children will be cared for. You should work with the Social Security Administration and your financial advisor to determine how to integrate Social Security into your overall retirement plan.
What is the purpose of social security?
Social Security was originally intended only to supplement other sources of income in retirement.
However, Social Security is now a main source of income for many Americans. According to the Social Security Administration (SSA), on average today’s retirees derive 33% of their income from Social Security benefits.1 The remaining sources include employment earnings (34%), pensions and annuities (20%), income from assets (9%) and other (4%).1
Individuals receiving Social Security as their primary or sole source of income are usually living below, along or just above the national poverty level.
For a more comfortable retirement, individuals are encouraged to plan, save and invest with a financial advisor, so Social Security is only a supplement to their total retirement income.
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1 “Fast Facts & Figures About Social Security, 2017,” Social Security Administration
2 “Social Security Fact Sheet,” https://www.ssa.gov/news/press/factsheets/basicfact-alt.pdf.
3 “Income of the Population 55 or Older, 2014,” Social Security Administration.