Social Security: Know Your Safety Net for Retirement

Social Security is a government program designed to provide income to retired workers, people with disabilities, and their families. It works like a basic retirement plan, funded through payroll taxes under the Federal Insurance Contributions Act (FICA).

How does it work?

Workers and their employers pay Social Security taxes throughout their working lives. Those contributions fund the benefits of people already retired; when you retire, the contributions of new generations will fund yours. The amount you receive depends on how much you contributed and the age at which you choose to start collecting.

When to start collecting

• Early age: you can start before full retirement age, but you'll receive a smaller monthly benefit.
• Full age: you receive 100% of the calculated benefit.
• Later age: if you wait beyond full retirement age, your monthly benefit increases.

A net, not a complete plan

Social Security is an important foundation, but it rarely suffices on its own to maintain your lifestyle in retirement. It's wise to complement it with your own savings and investments, such as an IRA or an employer-sponsored retirement plan.

Think of Social Security as the foundation of your retirement, not the whole house.