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Social Security Retirement Income Benefit

Retiring before you reach the age where you qualify for full social security retirement benefits can cost you dearly. You should consider working beyond the age in which social security thinks you should retire, particularly if you failed to save enough for your retirement years. Doing this will boost your monthly Social Security Retirement Income Benefit significantly - by at least seven percent.

The best known of the programs of Social Security is retirement, known formally as Old-Age and Survivors Insurance (OASI). Under this program, Social Security provides income to retirees, as well as benefits to a worker's surviving spouse and to a retired worker's children under age 18. As of September 2000, the program was issuing benefits to some thirty-two million retired workers and their dependents, as well as to nearly seven million survivors of deceased workers.

When you work and pay Social Security taxes, you earn credits toward a Social Security Retirement Income Benefit. The number of credits you need to get Social Security Retirement Income Benefit depends on when you were born. If you were born in 1929 or later, you need forty credits.

If you stop working before you have enough credits to qualify for benefits, the credits will remain on your Social Security record. If you return to work later on, you can add more credits so that you qualify. No Social Security Retirement Income Benefit can be paid until you have the required number of credits.

Your Social Security Retirement Income Benefit payment is based on how much you earned during your working career. Higher lifetime earnings result in higher benefits. If there were some years when you did not work nor had low earnings, your Social Security Retirement Income Benefit amount may be lower than if you had worked steadily.

The Social Security Administration (SSA) keeps a record of earnings over your working life and pays benefits that are based on the average amount earned, provided a minimum number of work credits have been accumulated. Only income on which Social Security tax is paid is considered in calculating these work credits. Further, Social Security Retirement Income Benefit is financed primarily through dedicated payroll taxes paid by workers and their employers. Employees and employers split the 15.30 percent payroll tax equally, with employers paying 7.65 percent of an employee's income, and the employee kicking in the same. Self-employed individuals pay the entire 15.30 percent payroll tax. Thus, Social Security Retirement Income Benefit is not based on need but rather on income earned during your earning life.
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