Thinking that Social Security can do it all. Social Security never was meant to be your only source of retirement income. It always was meant to be part of a three-legged financial stool, along with private pensions and savings or investments.
Most financial planners tell people to figure out how much money they'll need in retirement (usually 70 to 80 percent of their preretirement incomes) and then, if possible, start socking away 10 percent of their incomes to meet this goal.
Remember, for the average wage earner, Social Security will replace only about 40 percent of what you make before you retire.
Thinking your Social Security benefit is based on your highest three or five years. Social Security retirement benefits are based on your lifetime average earnings.
In almost all cases, SSA uses your highest 35 years (not necessarily consecutive) to figure your retirement benefits.
If you haven't worked for 35 years, SSA must add "zero" years to your computation.
One good thing about using a high number of years to compute benefits is that a few years of lower earnings won't have a dramatic impact on your Social Security pension. Many folks retire before they turn 62 (the earliest age they can get Social Security) or they work part-time for a few years before they retire. A few years of lower earnings,
Thinking its OK to give your Social Security number to others. You may not realize the potential problems that can come about from letting the wrong person get hold of your Social Security number. Most of the time letting a business or organization know your Social Security number seems harmless enough, but make sure the business is a reputable one.
One of the key elements needed to steal your identity is your Social Security number. It's also a good idea to keep your Social Security card in a safe place. If your Social Security card is stolen or your number is being misused, contact Social Security's fraud hotline at 1-800-269-0271.
Thinking your Social Security taxes are building up a personal retirement account. Some folks think that because they have a Social Security number and they pay Social Security taxes, there's a special account that has all the money they've paid into Social Security, plus interest. That's not the case.
Social Security is basically a pay-as-you go system. The benefits people get today are being paid from the taxes of today's workers. Because it's a "social" insurance program, Social Security makes sure that there's money to help everyone.
You may get back more or less than you paid in, depending on how much you earned and how long you live. But the money you are paying to Social Security today in taxes is not going into a special account for you.
Reaching age 65 or full retirement age in 2008? - If you will turn 65 or reach full retirement age in 2008 and have not filed a Social Security or Medicare application, we can provide you with information that will be helpful in determining when to file an application. Mail us the following information:
- Your name.
- Social Security number.
- Estimated 2007 earnings.
- Estimated 2008 earnings.
- Complete mailing address.
- Telephone number (both
home and work).
-Date of birth.
- If you plan to retire in 2008, month in which you would.
- Spouse's Social Security number.
- Spouse's date of birth.
- If spouse is deceased, give date
of death.
Send it to: Your Social Security, Social Security Administration, 3885 Main St., 3rd Floor, Bridgeport CT 06606. Attn: A. Renzoni.
Anthony Renzoni is district manager of the Bridgeport office of the Social Security Administration. His column appears every Monday.
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