There are no laws on the books mandating private sector employers to provide their employees with some form of a pension plan. However, per company policy and employment agreements, almost fifty percent of workers are actually entitled to receive some form of retirement benefits in the U.S. private sector. Additionally, many retirees rely on the Social Security retirement benefits to make ends meet. The reality for future retirees is bleak to say the least. The Social Security program is expected to run out of money sooner than later, and as of yet, lawmakers have not agreed on a plan to address these concerns. Additionally, pension plan laws are some of the most convoluted areas of law in existence, and in reality, many workers are entitled to benefits, but are never really guaranteed to receive them. The paragraphs below give a brief overview of the retirement and pension plan laws in the U.S., which have numerous exemptions and are subject to change virtually on a whim.
Federal Social Security benefits were invented ideally to prevent workers from experiencing extreme poverty later in life, and to this day, social security benefits rarely consist of enough money to live at a high standard of living. There are some basics about Social Security benefits it is good to be aware of including who can receive these benefits and how soon can you claim your retirement benefits.
Social Security retirement benefits are only paid out to individuals having earned enough credits in their previous working years. Credits are accumulated quarterly, and employees must earn a specific amount of money or more to achieve the full amount of credits each quarter. Then, differing plans, depending on your age, require different credit amounts.
Aside from individual retirees, some dependants of these retirees with enough credits can receive derivative benefits. These individuals, depending on your individual credit count and age, can include:
Individual retirees can file for retirement benefits with the SSA as early as age sixty-two, but there are some advantages to filing at different times. For starters, individual workers may continue to work once they have filed for “retirement” benefits from the SSA. If you are interested in finding out how many credits you have accrued with the SSA, you must file the Social Security Administrators Form SSA-7004.
Individuals receiving social security retirement benefits do not specifically have to pay taxes on this income. However, any interest or dividends earned from this money can be viewed as taxable income depending on how it is structured. Additionally, individuals with an adjusted gross income and half of SSA benefits add up more than $25,000, then individuals must pay tax on the one half of SSA income received.
Depending on what age you begin collecting benefits with SSA, your monthly benefits amount will be adjusted. The SSA sets a full-retirement age for individuals based on the year they were born, which depending on what year you were born ranges from 65 years old to 67 years old for persons born in 1999. The longer you wait to receive benefits the larger these monthly SSA payments become.