Chapter 4 - Social Security Benefits, Concern, and Taxability

Chapter 1addresses qualified assets. When a qualified asset is distributed, the distribution is recognized and referred to as qualified income. Not to be confused with qualified asset distributions as income, Social Security and pensions are qualified incomes and are also taxable. Many Americans contribute to one or both of these programs and are entitled to receive their benefits, regardless of how they affect their income tax. Generally, Social Security and/or pension strategies are built into their retirement plan as a necessary income and are taxed accordingly. Information previously discussed has a domino effect on your retirement and should be properly coordinated.

Based on the information collected while researching and writingPositioning 4 Retirement, it is apparent that the Social Security system in this country is much larger than people realize. Knowing the vast nature of this system, it is incomprehensible to think that Social Security could ever not exist to take care of the American family.

The Social Security program supports individuals who are retired, widowed, married, divorced, or disabled or care for their disabled family member. If the system ever failed, then it would put our economy into a tailspin; homelessness, welfare, crime, and poverty levels would be staggering.

The Social Security Administration has been moving cautiously to trim programs where individuals have found opportunity to capitalize on the system. Research also reveals a need to change the system to fit current and foreseeable concerns. Change can be positive to those who need the system for the reasons that it was designed. For individuals that are legally taking advantage of the system, change will have a negative impact. Unfortunately, there are individuals that are using the system fairly and are caught between the old rules and the new rules.

How Social Security Benefits Are Determined

Social Security retirement benefits are intended for individuals, their spouse, their ex-spouse, or their family members who have paid into the system for at least ten years. Most people file for their benefit when they retire and/or are between ages sixty-two and seventy. There is no advantage to filing after seventy years old.

Benefits are based on a chart that was established by the Social Security Administration.

An individual’s benefit is determined by his or her full retirement age that is assigned by the year that he or she was born. The benefit is calculated from a person’s highest thirty-five years of earnings. The income a person receives is based on a credit system. Each year after the thirty-fifth year, the system will reject the lowest earnings year and replace it with the new l