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Frequently Asked Questions: How Do I Use It? |
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SOCIAL SECURITY AS A FINANCIAL PLANNING TOOL Financial planning is a method people use to meet future financial goals and to minimize financial risks. Social Security is this nations basic method of assuring a continuing income to you and your family if you retire, become disabled, or die. Social Security thus helps to minimize the risk of financial disaster at disability or death. And with proper planning, it can help to meet the goal of financial security at retirement. |
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WHAT YOU NEED TO KNOW To use Social Security effectively, you need to know certain facts about the program. These facts include:
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HOW MUCH CAN YOU EXPECT IN BENEFITS? First, how much can you expect in benefits when you retire, or in the event you die or become disabled? Since, as we stated, Social Security does not replace all of your earnings, you need to know how much of your earnings will be replaced. This depends on how high your earnings are under Social Security. The more you earn, the higher your benefit, but the lower your replacement rate; the lower your earnings, the higher the percentage of your earnings Social Security replaces. Benefits are weighted to favor the low earner because he/she has less opportunity to save or invest. For example: If your average lifetime wages are at the minimum wage level, Social Security will replace about 60 percent of your earnings. If you are earning average wages over your working life, your Social Security benefits will replace about 42 percent of your monthly earnings. If you are earning maximum wages, your Social Security benefits will replace about 26 percent of your monthly earnings. |
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HOW TO GET AN ESTIMATE To make it easier for you, Social Security provides a Personal Earnings and Benefit Estimate Statement (PEBES) upon request. You should call Social Security and ask for a request form, Form 7004. Or you can download it here. Once the request form is completed and mailed, a statement should arrive in about four to six weeks. The statement will show: annual wage and self-employment earnings total, estimated Social Security taxes paid, number of work credits earned, estimated monthly benefits. If there is any error or omission, contact Social Security by calling 1-800-772-1213. You should have your copy of W-2s and self-employment tax returns. |
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WHAT DOESNT AFFECT SOCIAL SECURITY BENEFITS In general, only earnings from work done after you start receiving benefits affect your benefits. Most other types of retirement income will not affect your benefits. For example:
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WHAT DOES AFFECT SOCIAL SECURITY BENEFITS
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WHEN TO CONTACT SOCIAL SECURITY
These services are funded already through Social Security taxes. No additional payment is needed. Some companies try to collect money for services that Social Security provides for free. |
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Social Security has a toll-free number that operates from
7a.m. to 7p.m., Monday to Friday: 1-800-772-1213 If you have a touch-tone
phone, recorded information and services are available 24 hours a day,
including weekends and holidays. People who are deaf or hard of hearing
may call our toll-free "TTY" number, 1-800-325-0778,
between 7 a.m. and 7 p.m. on Monday through Friday. Please have your Social
Security number handy when you call us. Or you could visit us: click here to find your Social Security office address. |
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Last reviewed or modified Wednesday Jul 02, 2008 |