For most Americans, Social Security will be a foundational piece of their retirement income. How does it work and when should you take it? When is the earliest you can start Social Security and why would you want to delay? In this episode, I’ll answer some of the top questions about Social Security.
WHAT ARE THE THREE MAIN TYPES OF SOCIAL SECURITY BENEFITS FOR RETIREMENT?
- Retired Worker Benefit – This benefit is taken off your own working history.
- Spousal Benefit – This benefit provides the worker’s spouse with a benefit once the worker has claimed his (or her) own benefit.
- Widow(er) or Survivor Benefit – This benefit provides a surviving spouse with a benefit after a worker’s death.
WHAT IS YOUR PRIMARY INSURANCE AMOUNT?
- This is the amount of Social Security benefit you’ll receive at full retirement age (between 66-67) based on your own work history.
- This is based on your highest 35 years of working history, indexed for inflation.
- Get your statement from ssa.gov.
SHOULD YOU TAKE SOCIAL SECURITY AT 62?
- I did a full show on this. Here is the link. https://thriverp.com/should-you-take-social-security-at-62/
- If you’re weighing the options of retiring early and taking your Social Security benefits, it’s important to know that you’ll receive a reduced benefit, depending on how early you decide to start your benefit.
- This reduced benefit is permanent.
- I’d highly encourage you to consider your spouse’s situation as it pertains to the survivor benefit.
- If you’re going to continue to work, make sure you’re aware of the earnings test. In summary, $1 in benefits will be withheld for every $2 of earning about an annual limit (in 2021 this is $18,960).
- The spousal benefit is also reduced if you take it before full retirement age.
WHAT IS THE LATEST YOU SHOULD TAKE SOCIAL SECURITY?
- The latest you would want to take your own benefit is 70.
- Be aware of DRCs of 8% per year after full retirement age.
- The latest you would want to take the spousal benefit would be at full retirement age.
HOW DOES THE SOCIAL SECURITY SPOUSAL BENEFIT WORK?
- I did an earlier show on Social Security spousal benefits. You can access it here. https://thriverp.com/navigating-social-security-spousal-benefits/
- You must be married for at least 1 year and the primary worker must have filed in most cases.
- To qualify your own benefit based on your own working history can’t be greater than half of the primary worker’s PIA. The spousal benefit can be up to 50% of the higher earning spouse’s PIA. As long as the higher earning spouse has started their benefit, when they took it does not impact the spousal benefit amount. This amount is based solely on PIA and when you claim the spousal benefit.
- In reality, you get your own benefit and then a spousal boost up to 50% of the higher earner’s PIA.
WHEN SHOULD YOU START SOCIAL SECURITY?
- Starting Social Security is not just about the basics of 62, FRA, and 70.
- Consider the assets you have saved in 401(k)s, IRAs, and retirement accounts.
- In some cases it may make sense to delay Social Security and let the benefit get larger, while still being able to retire early from assets.
- Don’t make your Social Security decisions in a bubble.
- If you’re a widow there may be additional flexibility on when to start your Social Security.
- These Social Security decisions can have an impact of more than $100,000 during retirement in some cases.
- This is all part of the income planning process.
ACTION STEPS
- Watch my free Social Security Masterclass
- Sit down for a free Social Security analysis. We’ll take a look at when you want to retire, the assets you have available, the plans you have to replace your retirement income, and help you decide when to take Social Security.
- If you would like to sit down and discuss your Social Security benefits, your assets, and create a plan on when to retire, call us at 801-810-8434 or go to thriverp.com and click on get started to learn more.
- Thrive Retirement Planning is a holistic fiduciary firm and we can meet with you either in person or virtually.
Do you have questions about when to take Social Security and how to maximize your benefit? Take our free online Social Security Masterclass by going to thriverp.com/ss.
