Your Social Security Nest Egg

In 1950, 16 workers supported every Social Security beneficiary. Only 3.3 workers do so today, and that ratio is expected to get even tighter because of increasing life expectancy, low birth rates and retiring baby boomers.

Unless Congress makes major changes to the system’s funding or benefits, by 2018 it will pay more in benefits that it receives in taxes.

Most owner-operators are not planning to rely solely on Social Security for retirement benefits. Of the 60 percent who have a retirement savings plan, most become aggressive with it during their 40s, but continue saving until they retire.

For Social Security questions, call (800) 772-1213 or visit this site. The website has answers to many common questions, a forum for additional questions, benefit calculators and benefit application forms.

Owner-operators, in one sense, have a higher stake in Social Security than most Americans. Because you’re self-employed, you’re kicking in the entire contribution – a whopping 15.3
percent of your net income (which includes Medicare). Employers and employees split the amount, 7.65 percent each.

Still, self-employed people are subject to the same rules as everyone else. Achieving eligibility for benefits requires earning $3,600 a year for 10 years, says Christine Halsam of American Truck Business Services of Kittredge, Colo. The formula for computing benefits is more complicated.

“The average monthly payment for August 2004 was $426,” she says. “It probably won’t amount to a whole lot of money for someone who has earned an average income most of their lives.”
The best clue to your expected benefits is the estimate mailed to you yearly. If you’ve missed it, you can order a copy by phone or online.

Lacking that statement, you can get a projection by visiting and clicking on “Calculate your benefits.” You’ll have a choice of three calculators. Using the Quick Calculator takes only a few seconds. The Online Calculator, which is more accurate, requires you to enter your earnings for every year you’ve worked. The Detailed Calculator, which has to be downloaded to your computer, does even more.

You can start drawing Social Security as early as age 62, but the benefit is reduced – and stays reduced for life. Full benefits begin if you wait until full retirement age. For those born in 1937 or earlier, that begins at 65 years. Then it phases up each birth year until 1960. Full retirement begins at age 67 for those born in 1960 or later.

“In between full retirement and age 70, you can earn delayed retirement credits,” says Frank Viera, a spokesman for the Social Security Administration. That means the longer you wait to start cashing in, the more your monthly benefit will be.

Should you want to keep hauling into those golden years, your earnings will not reduce benefits, with the exception of those drawing early retirement benefits. However, “Once you reach full retirement age, you can draw any amount of salary and it will not affect your benefits,” says Social Security spokeswoman Patti Patterson.

Consider your preferences for working, your expected longevity, your personal savings and other factors, then check with Social Security representatives or your accountant about the best time to retire.