Key Questions Answered About Social Security

Here is the transcript to my podcast, “Key Questions Answered About Social Security.”

Welcome! I’m Tom Copeland. Thanks for listening!

This show is about the business side of child care and is for family child care providers and those who work in child care centers.

Today I’ll be answering three basic questions about Social Security.

1) How do I qualify for Social Security?

2) How much will I receive from Social Security?

3) Will Social Security still be around when I retire?

Let’s take these questions in order.

First, How do I qualify for Social Security?

You must be age 62 or older and have earned at least 40 Social Security credits over your working lifetime.

If you become disabled before reaching age 62 you can qualify for Social Security benefits with fewer than 40 credits.

You earn Social Security credits by working at a job and paying Social Security taxes. If you work in a child care center, your center is withholding Social Security taxes from your paycheck. If you are a family child care provider you should be paying your Social Security taxes at the end of the year by filing IRS Form 1040SE Self Employment Tax.

You can earn up to four credits a year to qualify for Social Security benefits. For 2014, you must earn at least $1,200 to earn one credit, or $4,800 to earn four credits.

To find out how many credits you have, go to the Social Security website: and sign up for online access to your records. There you will see how many credits you have earned so far and whether or not you have already qualified to receive Social Security. If you are over age 60 you will get an annual Social Security statement mailed to you. If you are between the ages of 25 and 60, and you have not signed up for this online access, Social Security will mail you a statement every five years.

It’s particularly important for family child care providers to check their Social Security statement to make sure they have the proper number of credits. This is because you must file IRS Form 1040ES each year. Failure to file this form will mean that you will receive lower Social Security benefits.

Now let’s move on to question number 2: How much will I receive from Social Security?

Your Social Security benefits will be based on your earnings history and how old you are when you first begin taking benefits.

The exact formula for calculating your Social Security benefits is complicated. Your benefits will be based on the 35 highest earning years over your lifetime. In addition, the longer you wait to collect Social Security benefits, the greater your benefits will be.

For example, if you are single, age 50, plan to retire at age 67 and earned an average of $30,000 over 35 years, your monthly Social Security benefit would be $1,888 or $22,666 a year. If you earned $40,000 a year your benefit would be $2,215 a month or $26,590 a year. For family child care providers, your earnings are based on your net income, or profit.

If you claimed Social Security at the youngest age possible, age 62, your benefit will be about 30% less than if you waited to take benefits until your full retirement age. Your full retirement age is 66 if you were born between 1943 and 1954 and age 67 if you were born after 1960.

For each year after your full retirement age that you wait to collect Social Security benefits, they will increase by about 8%. That’s a lot. Therefore, if possible, you want to try to delay taking Social Security as long as you can.

I strongly recommend that you go to the Social Security website ( and find out what your benefit will be based on your past work history. You can plug in your estimated income until retirement to get a more accurate picture of what you can expect to get from Social Security.

Now let’s look at our last question, Will Social Security Still Be Around When I Retire?

My short answer is Yes! I’ve heard from child care people, particularly those who are under age 25 who don’t expect Social Security to be for them when they retire. I think this is nonsense.

Certainly, there needs to be some changes made in Social Security to put it on a more strong financial footing. However, even if no changes are made in the program, full benefits will be paid out until 2033, at which point retirees would receive about 75% of their normal benefit. Although I don’t know what changes may or may not be made to Social Security, I cannot image that it will go away.

A final note: Determining when to start taking Social Security benefits, particularly if you are married, is a decision that can have a major financial impact on your years in retirement. Therefore, I strongly recommend that you consult with your local Social Security office or a financial planner at least a year before you are considering retiring to help you understand your options.

For more information about Social Security, visit my blog at There I’ve posted hundreds of articles and other resources to help you succeed as a business. I’ve also written a book, Family Child Care Money Management & Retirement Guide, available from Redleaf Press (

Thanks for listening. This is Tom Copeland hoping you will listen in for my next broadcast at the Child Care Bar and Grill.

Tom Copeland –

Money Management small

Categories: Money Management & Retirement, Retirement Planning

Tags: , , , ,