How Does Social Security Work


Imagine living somewhere where you’re 100% responsible for your own economic security, regardless of your age or health, with no one to bail you out if you find yourself in need of financial assistance. If you’re a U.S. citizen, you don’t have to worry about it. Through a little program called Social Security, the U.S. government has committed to providing for the economic security of its citizens.

There’s a good deal of confusion surrounding Social Security and how this vast program works, so let’s go over the basics that every American should know.

How does Social Security work?
Social Security works by pooling mandatory contributions from workers into a large pot and then paying out benefits to those who are eligible for them. When you work, you pay into the system by having a portion of your earnings taxed and earmarked for Social Security. For 2015, the maximum taxable earnings limit is $118,500. Later on, when you become eligible for benefits, you get to collect them instead of paying for the benefits of others.

The Social Security Administration reports that $0.85 of every Social Security tax dollar goes to a trust fund that pays monthly

Government Health Insurance Website Getting Upgrades

91cc9de610714eafa2032ec9b17c476dWASHINGTON — Consumers shopping on the government’s health insurance website should find it easier this year to get basic questions answered about their doctors, medications and costs, according to an internal government document.

A slide presentation dated Sept. 29 says’s window-shopping feature is getting a major upgrade. Window shopping is a popular part of the website that allows consumers to browse for taxpayer-subsidized health insurance plans. A copy of the document from the Centers for Medicare & Medicaid Services was provided to The Associated Press.

If final testing now underway goes smoothly, the new e-commerce tools could take some of the uncertainty out of picking a health plan when the 2016 sign-up season starts on Nov. 1. Many consumers have found the process overwhelming.

Previously, it could take considerable digging to find out plan details. Now consumers would be able to enter their doctors, hospitals and medications as they browse online. When they go to compare plans, they would see whether those doctors, hospitals and drugs are covered.

(Tips: Call the doctor’s office and insurer to verify provider and hospital listings. And make sure to enter the correct name of any medications. For example, if

How to Handle Your Newfound Home Equity

481135963NEW YORK — A whole lot of U.S. homeowners are seeing their home equity recover from the housing crisis, but does that mean a home equity loan is in order?

Even with a stable housing market, it depends on your circumstances.
According to the National Association of Realtors, the median existing home price of $228,700 in August was 4.7 percent higher than it was in August 2014. That marked nearly four consecutive years of price increases, even as the interest rate on a 30-year fixed-rate mortgage actually lower at 3.85 percent on Oct. 1 compared to 3.94 percent on Oct. 6, 2011, according to Freddie Mac. According to National Association of Realtors chief economist Lawrence Yun, even a Fed rate hike won’t change that.

“When the Federal Reserve decides to lift short — term rates — likely later this year — the impact on mortgage rates and overall housing demand will likely not be pronounced,” Yun said at the release of August’s existing-home data. “With job growth holding steady, prospective buyers can handle any gradual rise in mortgage rates — especially if today’s stronger labor market finally leads to a boost in wages and

Saving Money Through Food

If you are living the life of a busy professional, you can often be alarmed upon checking your bank account to realize you are not actually making much headway on your savings goal. Student loans, car payments, house notes aside, where is all that money going? One place you are sure to be hemorrhaging out funds that could have gone to your savings account is in your food budget. All too many people throw money away on meals and drinks they thought they could not live without, but turned out to be something they wish they had never experienced.

Rather than throw your money away on a one-time experience that you actually wish had never happened in the first place, try getting a bit more savvy about how you spend your money on food. Are we suggesting that you head to the grocery store and hand pick every single item you plan to consume? No, not necessarily. We understand that time is money too, and if you start spending that much time on selecting each and every food product, you will have less time to work, end up lowering your income, and thus reducing your potential for savings on that end,

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Which States Tax Social Security Retirement Benefits

Build a sizable nest egg? Check. Purchase a new set of golf clubs? Check. Plan for taxes on your retirement income? Chhhh … Wait a minute. Plan for what?

Lots of retirees are surprised by the big bite that taxes can take out of their savings . And depending on where you live, the tax hit can be especially painful. In fact, some states even tax Social Security benefits , the most important source of income for many retirees.

The 13 states that tax Social Security are Colorado, Connecticut, Kansas, Minnesota, Missouri, Montana, Nebraska, New Mexico, North Dakota, Rhode Island, Utah, Vermont and West Virginia.

But just because a state taxes Social Security doesn’t mean it’s a bad place to retire. Overall, Colorado and West Virginia are actually tax-friendly places to live in retirement despite the tax on Social Security. Weigh a state’s entire tax picture — from income tax to sales tax to property tax — to better understand how your money will be taxed and how you can budget for those costs.

Kiplinger’s tax maps can help. Check out the most tax-friendly states for retirees and the least tax-friendly states for retirees to identify your best place for retirement.