It’s Never Too Early to Know Your Social Security Benefits

Yes! I’m coming back to you with another blog post this week. Working in the corporate world often has us professionals focused entirely on meeting quotas, proposals, project deadlines, getting promotions, etc. However, we often don’t put the same energy in making sure that our benefits are aligned to prepare us for life after our careers. It is apparent that college graduates (like myself) entering into the workforce do not know or know little about the intricacies of the 401K retirement plan and other benefits such as social security. All of these factors play in part with your salary and what benefit package you signed up for when selecting a job (i.e. 401K company contribution). This is why I am here to give you a little insight on what you should monitor annually as you progress forward in your career.

How does social security work? Social security works by pooling mandatory contributions from each pay check into a large pot and then paying out benefits to you once you reach a certain age or become disabled. It is important to note that when you retire, you can collect both social security and distributions from your 401K simultaneously.

This is why for professionals like myself, having at least 5 years of work experience, it is important to get an overview of what the estimated social security benefits would be per month if I happened to become disabled or wanted to know what age I could potentially retire.

How can I find this information? You can sign up on the Social Security website (https://ssa.gov) and click Online Services to create your account. Once you do this it will provide a social security statement to show how much you have paid in Social Security and Medicare taxes to date. It will also show your last reported earnings from the previous year.

Why is this important? Knowing what your estimated monthly income source will be from your social security benefits will help you make better decisions on how much you want to contribute into your 401K. On average, Social Security will replace about 40% of your annual pre-retirement earnings. Therefore, it is important to make sure that you are contributing to your 401K and are working for a company that has at least a 3% to 6% 401K match so you can be better prepared for your financial future.

I hope this information helps!

Resources:

https://www.ssa.gov/