
Social Security
The Good and Bad of Social Security
You know that Social Security plays a significant role in retirement, but what are the overlooked pros and cons of it? We’ve laid them out here.
Everyone knows of Social Security, but there’s a surprising amount of misunderstanding about what Social Security is (and is not). We wanted to clear up those misconceptions because understanding Social Security is critical to maximizing your retirement income. So, let’s start with the basics of Social Security.
Social Security is a government-run program and provides qualifying workers a paycheck each month in retirement. While working, you’re required to pay a portion of each paycheck through your taxes, by law per the Federal Insurance Contributions Act (FICA), to help fund Social Security. When you retire, you get a monthly check from the Social Security Administration that will continue for as long as you’re alive.
As long as you’ve earned enough Social Security credits, typically meaning you’ve worked and paid taxes for at least 10 years, you’ll be eligible for benefits when you retire. You can start receiving benefits as early as 62 or as late as 70 years old.
The size of your benefits depends on the number of years you’ve worked, how large your earnings were during those years, the cost of living, and, importantly, at what age you claim your benefits.
While there are more granular features of Social Security, knowing these key elements can help you make the decisions to maximize your benefits.
Ultimately, the Social Security program offers benefits beyond the basic retirement paycheck, including Medicare, spousal, and disability.
The old retirement adage says that we should use the three-legged stool approach to prepare for retirement:
According to the Social Security Administration, individuals aged 65 and over in the top quartile for income (an average of $78,180) received only 18% of their income from Social Security. So where does the remaining 82% come from?
Your Personal Pension is backed by insurance companies which guarantee that for every dollar you contribute, you will receive a certain amount of income every month starting when you retire. Unlike an income annuity, the Personal Pension allows you to contribute incrementally, in smaller amounts and at a younger age, similar to the way you’d put aside money in your savings account or 401(k).
Similar to the Personal Pension, income annuities provide a guaranteed lifetime stream of income during your retirement. However, instead of contributing over time, you pay a lump sum upfront to purchase your annuity from an insurance company. Then, the insurance company sends you a series of payments for the rest of your life.
A Personal Pension is a contract between you and top rated insurance companies. By making contributions to your Personal Pension over time, you develop a portfolio of guaranteed income available in retirement. Blueprint Income offers a Personal Pension account with the lowest minimum, $100. After opening an account, you can make subsequent contributions of $100 or more, each of which will increase your pension check.
Here you can see what contributing to a Personal Pension will guarantee you in annuity retirement income. After just a few years in retirement, you’ll have recouped your initial investment, and the rest will be profit.
At Blueprint Income, we offer annuities from more than 15 top rated insurance companies. Click below to get real-time personalized quotes.
From there, you’ll get access to our annuity guides and team of specialists to help you analyze your retirement finances and walk you through the application process.
You know that Social Security plays a significant role in retirement, but what are the overlooked pros and cons of it? We’ve laid them out here.
Here’s what you need to know when applying for your Social Security benefits.
For most Americans, Social Security only accounts for a portion of their retirement income. Here’s how you can fill this gap to ensure you have enough income during your golden years.