Social Security Incentives and Tendencies

NB: We do not resell your papers. Upon ordering, we do an original paper exclusively for you.

NB: All your data is kept safe from the public.

Table of Contents

Introduction
Main body
Conclusion

Introduction

Social Security system grants benefits for older Americans, workers who become disabled, and families in which a spouse or parent dies. The period everyone feared in the 20^th century is now underway as baby boomers began to retire. Currently, a reduction in Social Security paychecks value drives people to save money while working and claim their benefits after the full retirement age. The present paper offers a short insight into the rationale behind the tendencies.

Main body

The Social Security system emerged in the 1930s during the presidency of Franklin D. Roosevelt, however, the talks about saving money for retirement continue until the present day. Therefore, it is safe to say that the sole fact of providing Social Security does not lead people to avoid saving while working altogether, and there are two main reasons for this. First, the earning rate of the benefits grant does not seem to be enough to sustain the customary lifestyle.

Second, there are several retirement savings programs, such as 401(k) plan and IRA, which a wise investor would not wish to avoid. However, US citizens need to save much less than they would have to if they could not apply for Social Security benefits. In short, a glance at Social Security policy grants the understanding that it reduces the amount of savings US citizens have to make, although people still need to save money for retirement.

There is another point to consider while realizing how Social Security affects the pattern of personal savings for retirement. Recent researches show that delaying retirement for just three to six months has the same impact as savings 1 percent more of your salary over 30 years. The matter is because a person can preserve his or her savings and even keep contributing to the assets. Thus, some people would prefer working for extra 2-3 years rather than try to save more money during their lifetime.

However, the reality is that people wish to retire as soon as possible and people should not count on that to solve a shortfall caused by not saving enough. In essence, while Social Security provides additional benefits for those working after full retirement age, it is not considered a viable strategy for savings reductions during working years.

Instead of savings, some people prefer to continue working even after applying for Social Security benefits, however, there are strict regulations concerning the matter. In 2018 a person can work and claim 100% of his or her benefits only when earning under $17,040.

For every $2 made over the threshold, a recipient must repay $1 to Social Security. Hence, there are two ways of avoiding the penalty: continue working until the full retirement age without applying for Social Security, or get the benefits and have a side job with a salary less than $17,040. Although this may be true, it is crucial to understand that any benefits withheld while a person continues to work will apply later as a permanent addition to paychecks value after the full retirement. To summarize, the reduction in benefits associated with higher earnings may drive people to adjust their retirement plans accordingly.

Conclusion

The Social Security system is pivotal as it makes people feel better about the insecurities life offers and grants relative financial help during the hard times. At the same, the current state of Social Security benefits makes people work for more years and continue saving money for retirement. Moreover, the benefits may decrease in value throughout the years, as there is no guarantee the government grants that the law concerning Social Security will not become more severe. In conclusion, the present paper shows that there is a rationale behind saving more money while working and continue working after the full retirement age.

Click Here To Order Now!

Introduction

Main body

Conclusion

Related