Your Top Social Security Questions Answered
01 Jan 2019
Social Security is something we have all heard about, and something most of us will get in retirement. However, a lot of people don’t know that much about Social Security. Here are some of the most common Social Security questions answered.
When Do I Get Social Security?
You can apply for Social Security at age 62. However, doing so reduces your total benefit. This reduction varies based on your Full Retirement Age1 and can be up to 30%. Once you reach Full Retirement Age, you can apply for Social Security with no reduction. Your Full Retirement Age is determined based on the year you were born. For example, if you were born in 1956 your Full Retirement Age is 66 and 4 months. You can also delay your Social Security until age 70. Doing this will increase your benefit 8% each year you wait after Full Retirement Age.
How Do I Apply For Social Security?
You can apply for your Social Security benefits in one of three ways: you can go to your local Social Security office and apply in person, you can call (800) 772-1213, or you can apply online at www.ssa.gov. You must be at least 61 years and 9 months in order to apply. Remember, the age you apply will impact your benefit, so make sure you have a plan for claiming.
How Much Social Security Will I Get?
Like most things when it comes to Social Security, this answer depends. Your benefit amount will vary based on a variety of factors. Your age when you apply will impact your benefits. Remember you have a reduction before Full Retirement Age and an increase in benefits after Full Retirement Age.
To become eligible for Social Security you must have 40 quarters of wages that we subject to Social Security payroll taxes (the quarters do not need to be consecutive). Benefits are calculated based on the average of the 35 highest years of earnings. If you don’t have 35 years of earnings, $0 will be used in all years less than 35 and will result in a lower benefit.
The average Social Security benefit paid to retired workers in March 2018 was $1,410, while the average spousal payment is about half that amount at $735. You can go to www.ssa.gov to access your my Social Security account to get an estimate of your benefits.
Can I Work And Collect Social Security?
The short answer is, yes. However, when it comes to Social Security things are never that easy. If you work while collecting Social Security before Full Retirement Age, and you make more than $17,040 (for the year 2018) $1 for every $2 of earnings over $17,040 will be withheld from your Social Security benefits. In the year that you reach Full Retirement Age in 2018 $1 for every $3 of earnings in excess of $45,360 will be withheld. Once you are past full retirement age, there are no penalties for working.
Is My Social Security Taxable?
Up to 85% of your Social Security, benefits can be taxable based on the amount of your provisional income. For the 2018 tax year, if you file your federal tax return as an individual and you make between $25,000 and $34,000, up to 50% of your benefits will be taxable. Now, this doesn’t mean that your tax rate is 50%, you will pay taxes based on your income tax bracket. If you make more than $34,000, up to 85% of your benefits will be taxable. If you are married filing jointly, and your combined income is between $32,000 and $44,000, up to 50% of your benefits will be taxable. If your combined income is more than $44,000, up to 85% of your benefits will be taxable.
What is considered provisional income? Provisional income includes ½ of your Social Security benefits, wages, business income, interest, income from municipal bonds, capital gains, dividends, Traditional IRA distributions, and more. Provisional income does not include tax-deferred build up inside IRAs, 401(k)s and annuities, income from Roth IRAs, or non-taxable income from life insurance. You should consult your tax professional to determine your provisional income.
Can I Collect On My Spouse’s Social Security?
Married individuals can claim Social Security based on their own personal earnings record (if eligible) or their spouse’s earnings record. If you do collect based on your spouse’s record the spousal benefit is up to 50% of your spouse’s Social Security benefit. You cannot claim spousal benefits until your spouse files for benefits. Like regular Social Security benefits, spousal benefits can be reduced if claimed before full retirement age.
If a spouse passes away, the surviving spouse can receive a step up to the benefit of the deceased spouse. Additionally, if you are divorced, you may still be eligible to collect spousal benefits based on an ex-spouse’s earnings records. You can claim retirement benefits based on an ex-spouse if, your marriage lasted at least 10 years, you have not remarried and your ex-spouse is entitled to Social Security. If your ex-spouse passes away, you may be eligible for survivor benefits if you were married for at least 10 years, you are age 60 or older and you don’t remarry until over age 60.
When Will I Receive My Social Security Check?
Once you apply, it could take up to three months to receive your first check. Social Security checks are now done through electronic payments and can be direct deposited into a bank or credit union or loaded onto a prepaid debit card. Your birthday will determine when in the month you will receive your check. If you were born between the 1st and 10th of the month, you will receive your payment on the second Wednesday of each month. If you were born between the 11th and 20th, you will receive your payment on the third Wednesday of each month, and if you were born the 21st or later you will receive your payment on the fourth Wednesday.
Who Qualifies For Social Security Disability?
If you have a medical condition that significantly limits your ability to work and perform basic activities, you may be eligible for Social Security Disability. You should be prepared to provide medical records that document your condition. You should also be aware that there is a several month wait to process disability applications, and disability payments won’t start until 6 months after your disability begins.
Claiming Social Security can be a big decision, and should be considered in the context of your full financial life. Our advisors can help you develop a financial plan to help you achieve a successful and comfortable retirement. To set up an appointment with an advisor, simply click on our Scheduling Link following link and select a time. Enter your information and someone will be in touch to help you walk you through the decision process and make the best decision for your situation.
Jeff has over 30 years of experience in the investment industry. He currently holds his FINRA Serices 6, 63, 66, 7, 24 & 51 licenses with LPL Financial as well as his health and life insurance licenses.