Social Security is a part of everyday life in the United States. Whether you’re trying to plan for the future or considering how you can stretch your benefits to meet your expenses, this government plan is included. Even those with high incomes, such as doctors, need to understand how Social Security works so that they can optimize its potential to supplement their income.
What is Social Security, and how can you, as a doctor, understand its potential benefits on your financial stability? We’ll review the basics in this step-by-step guide.
Step 1: Register With the SSA
The first step to getting serious with your retirement benefits is to register your account with the Social Security Administration (SSA). Yes, you’re already in their system, but to know what you’ve paid in and where you stand, you need an account.
This part is easy. You’ll need to have proof of identity to create an ID.me or Login.gov account. With your login, you’ll get access to an up-to-date Social Security statement that shows you how much you’ve earned so far in your history, and how those earnings estimate your future retirement, disability, or survivor payments.
Step 2: Use the SSA Calculators to Start Planning
The SSA website includes a wealth of information to help you plan for your Golden Years. Two tools you may want to get familiar with are the “Quick Calculator” and the “Detailed Calculator.”
The quick method uses your date of birth and past earnings to project your future Social Security Benefits. With the detailed method, you can adjust the calculations to be more specific, testing how your benefits would look if you retired early, late, or changed your income.
This general calculation gives you an idea of whether you’re on track to your retirement goals or off the mark and need to adjust what you’re doing.
Step 3: Consider Spousal Benefits
Married or divorced? Spousal benefits are an integral part of the planning process.
This step helps you to ensure your spouse is able to receive the benefits they need to have a stable retirement if you’re not around to care for them. Doctors and those in the medical field are often on the front lines, seeing how our health needs change as we age. You understand the importance of making sure you or your spouse has that extra, stable income when work is no longer an option.
To be eligible to obtain spousal Social Security, the partner must be 62 years old or older and already receiving Social Security benefits through retirement or disability. The marriage must have lasted at least one year. Divorced spouses can receive your Social Security benefits if the two of you were married 10 years or more and they are currently unmarried.
Step 4: Understand Your Contributions
Taxes taken out of your income always seem to be a negative thing — until you go to use them later. Social Security payroll taxes are put towards a credit that determines your benefits when you reach the government-stated retirement age, even if you’re still working.
However, these taxes are subject to a maximum limit that changes annually to account for inflation and wage averages. The maximum amount of wages that are subject to the payroll tax impacts your retirement contribution. You may have earned $300,000 last year, but only part of that was taxed. The rest is exempt. If you don’t understand this limitation, you may expect that your retirement credits are based on the total income you made instead of the maximum limit.
Step 5: Work With a Financial Expert to Create a Retirement Plan
Ready to make sure you and your spouse are sailing through your retirement years without a struggle? The time to start is now. However, Social Security benefits shouldn’t be the bulk of your plan.
Other strategies, like Roth IRAs, 401(k)s, and a diverse financial portfolio, can give you the stability you need to continue to live the lifestyle you’ve become accustomed to long after you hang up your stethoscope and white coat. How you manage to protect your assets today goes a long way in determining the funds you will have available in retirement. This article by OJM Group explains more about trusts, asset protection, and building financial stability.
Creating your retirement plan includes various moving parts. As a busy doctor, it’s easy to lose sight of all the changes in Social Security, the market, and other aspects of building a stable future. A financial expert can keep you on the right path to meet your Golden Years goals while you focus on the crucial job of helping others reach their health targets.
Conclusion
Financial planning always includes Social Security, but millions of people don’t take an active part in using the tools available to optimize their retirement. Set up your account with SSA today, and start maximizing your benefits for tomorrow.
