How Does Social Security Work?

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Social security works by deducting money from the payroll of younger works in order to pay the retirement income of Americans over the age of 62. Learn about the failures of the social security system with information from a registered financial consultant in this free video on social security.

Part of the Video Series: Money Management & Personal Finance
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Video Transcript

This is financial adviser Patrick Munro talking about how does social security work. Social security of course is developed by the government as a plan of retirement income for senior Americans once they get off the workforce and no longer are working. The earliest an American can apply for social security is age 62 but most notably the age of retirement is 65. If you can wait until 65, your benefit check will be a larger than when you are 62. However nowadays many Americans do not save for other forms of retirement when they're younger and as a result they will immediately apply at age 62 small check or not just to make sure that they have those dollars available to them. The way the system works is that it's funded by workers that are younger that are deducted at payroll source and those benefits are passed along to the retiring Americans as well. This works well when there's full employment in the country but down the road there could be some problems if there's not enough people funding into it. How does social security work? Well not very good, make sure you don't rely on social security as your form of retirement and make sure that you get educated to get a great financial future. This is Patrick Munro, financial adviser.

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