The Essential Social Security Rules You Need to Know

Social Security rally

Social Security rally Social Security is in jeopardy. | Scott Olson/Getty Images

Unprecedented doubt now surrounds what used to be considered guaranteed retirement income. The Social Security program is struggling with increased worry, as almost all Americans contribute, but not everyone might receive their checks. The program is well on its way to burning through its assets by 2034. CNN reports if we burn through the cash, beneficiaries can expect to receive only 77% of their payouts moving forward — a stat that flips the stomachs of those who rely heavily on these checks to make ends meet.

There’s no denying the outlook surrounding Social Security is less than pleasant. So it behooves Americans to get proactive in their approach to retirement and its corresponding benefits. How much should the average American expect to receive and when is the best time to withdraw for maximum effect? The Cheat Sheet will answer these questions, as well as a few other essential rules you must know about Social Security.

1. Your benefits are determined by your 35 highest-income years

  • It’s possible a portion of your earning years will become irrelevant when calculating benefits.

Your Social Security benefits are calculated using your 35 highest-income years. If you worked more than 35 years, it’s probable some of your additional work history will be irrelevant for your benefits calculation. On the other hand, working a few so-called “extra years” could help remove lower earning years from your history and result in higher payments. The taxable maximum for 2017 is $127,200, so working additional years beyond 35 could prove worthwhile for increasing your future payments.

Next: A claiming caveat

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