The Social Security System : Retirement Income Essay

1321 Words Dec 1st, 2014 6 Pages
Many young people do not think about planning for their retirement because it seems so far away . However, people should begin planning for retirement and managing their money early on so they can be sure they will have enough income to live on when they retire. “There are four primary sources of retirement income for individuals in the United States: (1) Social Security payments from the government, (2) traditional employer-sponsored defined benefit pension plans, (3) employer-sponsored defined contribution savings plans, and (4) individual savings accounts that are tied neither to the government nor to private employers ” (Beshears). Social security and pensions provide the main source of retirement income for most retired people . These two sources of income are not very complex and most people understand how they work . The Social Security system provides retirement income to qualified individuals and their spouses. While working, individuals and their employers make mandatory contributions to the Social Security system. Individuals are eligible to claim benefits when they reach the age of sixty-two. The benefits are greater if the individual works until a later age (Beshears). The second largest source of retirement income comes from employer-sponsored pension plans. Benefits are determined by a formula, usually linked to a worker’s compensation, age, and tenure. Benefits are usually paid out as a life annuity, or with married individuals, as a…

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