While Social Security shouldn’t be
relied upon to be the sole source of income during retirement, it can play an important role in your overall financial
strategy for retirement. But making sense of the basic ins and outs of Social
Security can be overwhelming. Here are three questions people commonly ask as
they approach retirement age:
When can I start taking benefits?
While full
retirement age is 66 for people born between 1943 and 1954 and gradually
increases to age 67 for those born in 1960 or later, you can start receiving
Social Security benefits at age 62.1 Keep in mind, however, that
there is a cost to early distribution; your benefits are reduced by about 0.5 percent
for each month you receive benefits before full retirement age.2 For
example, those born in 1955 with a full retirement age of 66 and two months who
start taking benefits at age 62 will receive about 75 percent of the full benefit.3
On the flip side, delaying benefits
past full retirement age, up to age 70, increases your distribution amount. If
the same individual in the previous example waits until age 68 to take
benefits, his or her benefit will increase 8 percent each year after full
retirement age. This increase continues until you reach age 70 or you start
taking benefits, whichever comes first.4
What happens to my benefits when I
die?
It depends. If you are married and
your spouse is age 60 or older, he or she may be eligible to collect a survivor’s
benefit. The benefit amount remains the same as the deceased’s amount, although
that amount is reduced if benefits
are started before the surviving spouse’s
full retirement age.5 A spouse
cannot collect both survivors benefits and retirement benefits based on their
own work record. They will collect whichever benefit is higher.6
If you have a minor child or
children, your surviving spouse (regardless of age) may also be eligible for a
survivors benefit until the minor child
turns age 16. If you have no surviving spouse or minor children, your benefit remains in the Social Security trust
fund and is not paid out to any other named beneficiaries, unless they qualify
under the Social Security survivors benefits eligibility rules.7
Can I work while receiving benefits?
Yes. However, if you haven’t reached
full retirement age, your benefit amount will be reduced if your earnings
exceed the limit. Starting with the month you’ve reached full
retirement age, your benefits will not be reduced
no matter how much you earn.8 The earnings limit and reduced amount
vary according to your age. To find out how much your benefits might be reduced, use the Social Security earnings
calculator at https://www.ssa.gov/OACT/COLA/RTeffect.html.9
Understanding Social Security can be challenging,
but you don’t have to go it alone. Contact us today to learn more about how to incorporate your Social Security
benefits into your complete financial
strategy. We may be able to identify potential retirement income gaps and may
introduce investment and insurance products as a potential solution.
Content prepared by Amy
Ragland.
1
Social Security. January 2017. “Understanding the Benefits.” https://www.ssa.gov/pubs/EN-05-10024.pdf. Accessed June 20, 2017.
2
Ibid.
3
Social Security. “Retirement Planner: Benefits By Year of Birth.” https://www.ssa.gov/planners/retire/agereduction.html. Accessed June 20, 2017.
4
Social Security. “Retirement Planner: Delayed Retirement Credits.” https://www.ssa.gov/planners/retire/delayret.html.
Accessed June 20, 2017.
5
Joseph L. Matthews. Caring.com. Dec. 24, 2016. “What
happens to the rest of a person’s Social Security money after they die?”
https://www.caring.com/questions/social-security-benefits-after-death. Accessed June 20, 2017.
6 Ibid.
7 Ibid.
8 Social Security. June 15, 2017. “What happens if I work and get Social Security retirement benefits?”
https://faq.ssa.gov/link/portal/34011/34019/Article/3739/What-happens-if-I-work-and-get-Social-Security-retirement-benefits. Accessed
June 20, 2017.
9 Social Security. “Retirement Earnings Test Calculator.” https://www.ssa.gov/OACT/COLA/RTeffect.html. Accessed
June 20, 2017.
Financial professionals are able to provide you with information
but not guidance or advice related to Social Security benefits. We are not
affiliated with the U.S. government or any governmental agency.
We are an independent firm helping individuals create retirement
strategies using a variety of insurance and investment products to custom suit
their needs and objectives. This material is intended to provide general
information to help you understand basic financial planning strategies and should not be construed as financial
advice. All investments are subject to risk
including the potential loss of principal. No investment strategy can guarantee
a profit or protect against loss in periods of declining values.
The information contained in this material is
believed to be reliable, but accuracy and completeness cannot be guaranteed; it
is not intended to be used as the sole basis for financial decisions. If you
are unable to access any of the news articles and sources through the links
provided in this text, please contact us to request a copy of the desired
reference.
Investment
Advisory Services offered through Global Financial Private Capital, LLC.
AE06175080C