Social Security

Social Security refers to a set of benefit programs established and run by the federal government. The Social Security program is commonly identified with old age or retirement benefits and with disability benefits. The program was created in 1935 as part of Franklin Roosevelt’s New Deal initiative. Medicare and Medicaid are also social insurance programs established and administered by the federal government, but they are separate from Social Security. Social Security is a “pay-as-you-go” entitlement program. This means that current tax revenue is used to support current beneficiaries. In other words, there are no assets set aside to fund future benefit payments. When combined with demographic trends (i.e. an aging society), the pay-as-you-go funding approach is a feature that brings into question the sustainability of Social Security. Currently, Social Security is funded largely through payroll or “FICA” taxes which are a blend of employee and employer contributions that come from taxes on the wages of workers and the self-employed. Whether you’re employed or are self-employed, Social Security taxes amount to 10.4% of earnings, with the applicable earnings capped by a ceiling that is adjusted every year. The earliest age to get retirement benefits is 62, but the longer you wait, the higher the benefits. The average Social Security benefit in January 2012 is $1,229 per month. Social Security benefits are inflation-adjusted with increases pegged to the consumer price index (CPI). Social Security is the sole source of retirement income for 22 percent of beneficiaries, and the program is the majority (greater than 50 percent) source of retirement income for 66 percent of beneficiaries.

Pensions and Annuities in the UK

Just read an interesting article in the Fool about the decline of personal pensions in the UK: http://www.fool.co.uk/news/investing/2010/02/15/a-decade-of-plunging-pen...

When to Begin Taking Social Security

Are there any recommended resources for the decision about when to begin taking Social Security?

I am especially interested in input for those who are relatively well-off (with assets in excess of $1 million).

Glossary: 

Inflation and Fixed Indexed Annuities

This forum thread is a continuation of a conversation that began as a comment and can be found here:

http://www.annuitydigest.com/blog/tom/fixed-annuity-sales-continue-soar-while-massive-inflation-risks-are-ignored#comment-363

The comment came from Phillip Hawley and is as follows:

Forums: 

Teresa Ghilarducci on Pension Reform

Teresa Ghilarducci is a staunch advocate of comprehensive...

The Top Reasons to Consider an Annuity

Annuities are complex, largely misunderstood, and often misrepresented in popular financial media.

The reality, though, is that these financial products are becoming an increasingly important part of the financial plans of millions of people around the world.  In fact, annuities are a vital component of the...

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