Social Security: Back to Basics

Physician's Money DigestNovember15 2003
Volume 10
Issue 21

If you're a physician in need of a wake-up callregarding the importance of saving for retirement,consider that roughly two thirds of Americans overage 65 receive more than half their income fromSocial Security. As of January 2003, the average monthlycheck for a retired worker was $895; for married couples,the average monthly check was only $1483. Thetop monthly Social Security payment was $1741 (about$21,000 per year).

Calculating Benefits

According to the AARP (, if youmade minimum-wage earnings all of your life, yourSocial Security benefit will replace about 59% of yourpreretirement wages. If you made the maximum wagesubject to Social Security taxes, your benefit will beroughly 24% of your preretirement earnings. If youearned much more than the maximum amount subjectto Social Security taxes, your monthly benefit check representsan even smaller percentage of what you used tomake. The top wage in 2003 subject to Social Securitytaxes is $87,000.

Maintaining Employment

If you're depending on Social Security for most ofyour income in retirement, you need to protect yourjob. Losing your job near the end of your career canhave a dramatic impact on your Social Security benefit.Your check is calculated based on your 35 highest-earning years, which are indexed for inflationand added together. Instead of your last years in theworkplace being high-earning years, they mightpotentially be zero.

If you lose your high-paying job as you approachSocial Security age, your Earnings and BenefitEstimate Statement won't look as good. It's based onyou continuing to work at an estimated salary untilyour full retirement age. If you're downsized beforereaching that age, you can't bank on the same SocialSecurity benefit in that statement. You might need totake a job at a lower rate of pay, which may affecthow much you'll receive from Social Security.

You should receive your Earnings and BenefitEstimate Statement each year from the SocialSecurity Administration. If you haven't received it,call 800-772-1213 or visit Anotherhelpful publication you can receive from the SocialSecurity Administration is called "Retirement Bene-fits" (Publication #05-10035).

Reprinted from Protecting & Rebuilding Your Retirement: EverythingYou Need to Do to Secure Your Financial Future (Amacom; 2003) byLes Abromovitz (

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