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Retirement Benefits Explained by a Trusted Accountant

Retirement benefits can get confusing for people who don't have a finance background. Charlotte CPA, Scott Boyar, however, is here to help make it all clear.

What Is Social Security?

Social Security is a federal government program designed to pay workers approximately 40% of pre-retirement income. That said, around 45% of unmarried beneficiaries and 21% of married ones get upwards of 90% of their pre-retirement income.

 

How Does Social Security Work?

Social Security comes from funds you've paid into the program during your working life through regular contributions from your payroll. As of this 2020 writing, most employees pay 6.2% of their income into Social Security while their employers pay the same amount toward each employee's retirement. Self-employed workers must contribute the entire 14.4% of their income.

 

Do You Qualify for Social Security Benefits?

Eligibility for Social Security benefits is based on credits that you earn for working. You need 40 credits to qualify for Social Security benefits, which most workers achieve in their first decade of working full time. You earn one credit per quarter that you earn a minimum amount working, and you can earn up to four credits per year. In 2020, those minimum amounts are $1,410 per quarter and $5,640 per year.

Additionally, even if you haven't earned enough credits to qualify for Social Security benefits on your own, you may still be eligible for spousal benefits if your spouse earned enough.

 

How to Get the Maximum Benefits

How much you receive in Social Security benefits depends mainly on when you decide to retire and start collecting them. The earliest age at which you can do this varies depending on the year you were born. For most people today, full retirement age is 66 or 67, but full retirement age is merely the age at which you can start collecting your maximum benefits. However, it is not the earliest age at which you can start collecting any benefits at all. You can currently begin collecting partial benefits at 62 years of age, but if you do, you'll only receive 70% of your benefits. If you wait until you turn 70 before collecting benefits, however, you'll get 94% of your full benefits.

 

Your retirement income and how you elect to file your taxes every year will, then, determine how much of your retirement checks you get to keep and how much you must pay back in income taxes. With the right tax accountant Charlotte, retirees can keep more of their retirement benefits and send less to the government. Charlotte CPA Scott Boyar is a tax accountant retirees can trust to help them reap the most benefits available to them and enjoy a comfortable and secure retirement.

Posted by Scott Boyar CPA

 

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