Understand Social Security and Unemployment

Use www.SSA.gov for all current updates of payments and benefits

What is social security? It is financed through the Federal Insurance Contributions Act. It’s a federal social insurance social welfare or insurance income. Employees and Employers contribute 6.2% of their income (up to a taxable max of $184,500 in 2026). Adjustments are made each year in efforts keep up with the cost of living and inflation.

You receive social security when your regular source of income ends or is interrupted by retirement, injury, disability or death. The amount you will receive in retirement is based on the highest 35 years of wages earned over your career.

It’s progressive which means that low income earning workers will receive a larger percentage of their previous earnings than higher paid workers will in their retirement. The goal is to create a reasonable (equitable) replacement income for all.

In 2021, the government paid out more from the excess funds in reserve that what it collects from workers. If congress doesn’t get involved, this surplus from the reserve will be spent by 2033. Meaning, retirement benefits will be reduced by 20%.

Research says the social security program helps about 22 million people out of poverty. Even so, your social security might not be enough to cover all your living expenses.

1 Rule of Thumb: expect 40% of social security to cover 40% of your after tax retirement income. Example: Your social security is $1700 per month. You will need an additional $2500 per month to cover your retirement expenses.

You can start collecting social security at age 62 but the longer you wait to collect, the higher it will be.

In March 2025, retroactive benefits and an increase in monthly benefit payments were paid to people affected by WEP (Windfall Elimination Provision) and GPO (Government Pension Offset).

The Big Beautiful Bill (BBB) does NOT eliminate your taxes on social security. It's important to read the key words under the headlines. It gives people who are 65 and older a $6000 deduction and a $12,000 deduction for married couples until 2028, the end of the Trump Administration (Congress would need to reauthorize for it to maintain). It’s basically a discount for 3 years. SOME people will not have to pay tax but others will.

General F.I.R.E. Strategy for Social Security Management

1. Make a realistic budget and stick to it

2. Build an emergency fund

3. Set clear goals. Have your “golden retirement number.” It’s the amount of money you need to live out your retirement without outliving your money. You will need approximately 25 times your target annual income. Example: If you need $40,000, you will build a $1 million dollar portfolio.

4. Passive income streams. Like rental properties, dividend paying stocks and bonds, side hustles, etc. Start as early as you can. Your money has to be working for you while you’re living your life.

   
   

Medicare

Medicare is a federal health insurance program for people over 65 and younger people with disabilities, end stage renal disease or amyotrophic lateral sclerosis (ALS). You get hospital in-patient care, medical care from private insurers, Medicare Advantage, and Prescription Drugs coverage provided by private insurers.

You are automatically enrolled when you turn 65 and receiving social security. Enrollment begins 7 months before you’re 65 and 8 months after you’ve turned 65. It does not cover dental, vision, hearing or long-term custodial care.

Medigap (Medicare supplement) reduces your out of pocket costs.

Hospital Insurance (HI) trust fund is estimated to be empty by 2031 which reduces your hospital in-patient care payments to 89% unless congress intervenes and takes action.

Medicare Savings Program (MSP) has been blocked for 9 years. There is has been delayed staffing for nursing homes, and medicine for rare diseases are excluded from the negotiation price program. Previous lawful immigrants are also excluded from new enrollment in 2026. This system is predicted to be empty by 2034 without congressional interference.

Unemployment (Taxable income)

Go to www.Usa.gov, put in your state and apply if you meet the requirements:

• you earned a certain amount within the last 12-24 months

• you worked consistently the last 12-24 months

• you're looking for new job.

When filing for unemployment benefits, you should file in the state you worked instead of the state you live in. COBRA helps qualified workers keep their health insurance for a limited time.

American job center is a finder to help you find jobs. Job Corps trains you for skills needed for a job. It is run by the department of labor.

*Sources: https://www.ssa.gov/

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