It’s important to know the difference between social security earnings and retirement benefits. While they are both important parts of your financial estate, they are two different means of income.
Find out how they’re similar and what makes them different. Get your questions answered here at Kathleen Day Law. And if there’s anything else you need to know, just give us a call. We’re here to help you understand social security and the law.
What are Social Security Earnings?
When you have a job in the United States, part of your earnings go toward paying taxes. Some of these taxes contribute to the Social Security Income (SSI) fund. This is a federally backed retirement fund where the government guarantees benefits to those who are eligible.
Your social security earnings are defined as all money that you’ve contributed to the SSI as a result of your taxed wages. Practically every person in America contributes to the SSI fund.
Likewise, these earnings are part of almost every American’s retirement plan. Upon retirement, you receive a predetermined amount of money from the federal government. The money received by SSI beneficiaries is paid for by the current US workforce.
What are Retirement Benefits?
While social security is often a cornerstone of your retirement benefits, it’s not your only option. A diverse retirement plan has much more than just SSI in its portfolio.
Here are some of the many retirement benefits you might consider:
Employer Matching 401k. Some employers will match a certain percentage of money an employee chooses to save for retirement. Depending on the 401k, it may offer additional tax incentives to the employee.
IRA An individual retirement account (IRA) allows a single person to manage their retirement savings without an employer’s assistance. An IRA offers tax incentives similar to a 401k. Employees may “roll-over” 401k retirement benefits into IRAs when they are between jobs.
Medicare. After the age of 65, a retired or working individual may have access to free or reduced health care through Medicare. This is another government sponsored retirement benefit that’s designed for everyone to access.
Savings Account. An individual’s personal savings should only compose a portion of their retirement portfolio. A well-kept savings account gives you access to liquid cash right when you need it. This can save you from incurring penalties associated with withdrawing from retirement funds early.
What’s The Difference between Social Security Earnings and Retirement Benefits?
Social security earnings are just the beginning of planning your financial future. These are federally guaranteed retirement benefits. There are many other retirement benefits that you can take advantage of. And you can still receive SSI.