8 Social Security Questions That You Need To Consider Before Retiring
If you are thinking about retiring in the next few years, chances are you are wondering about
the same things that many other people are at this stage of life. Here are some of the most
frequently asked questions that clients ask me about Social Security Benefits:
How is my monthly benefit amount determined?
Social Security bases your monthly benefit on the amount of FICA taxes that you paid through
out your work history. They take your monthly earnings during the 35 years in which you earned
the most, and index earnings from past years for inflation to calculate your basic benefit,
formally called your primary insurance amount.
How does drawing early effect my monthly benefit?
You can begin drawing benefits as early as age 62, but doing so reduces your monthly benefit to
75% of what it would be if you wait until you reach your full retirement age.
Can I delay my benefits past my full retirement age?
Yes, delaying your benefits past full retirement age earns you delayed retirement credits which
increase your monthly benefit by 8% for each year that you wait past full retirement. The
maximum delayed retirement credits that you can earn is 32% by delaying benefits until age
Can I draw benefits on my spouse’s work history?
If your spouse is currently drawing benefits then you can draw a spousal benefit that provides a
monthly amount up to half of your spouse’s current benefit.
Can I draw benefit off of an ex spouse?
You can draw benefits from an ex spouse if you were married for at least 10 years and are not
currently married. Your ex spouse does not have to be drawing benefits for you to draw ex
Will I receive my spouse’s benefit if she passes away?
If your spouse’s monthly benefit was higher than yours, you will begin receiving that higher
amount as a survivor benefit which will replace your monthly benefit.
Can I draw benefits while I am still working?
Yes, however if you work and receive benefits before reaching your full retirement age your
benefits will be reduced by $1 for every $2 that you earn over $16,920. The reduction changes to $1 for every $3 over $44,880 during the calendar year that you will reach full retirement age. There is no income related reduction in benefits after reaching full retirement age.
Will my Social Security benefits be taxed?
Your Social Security benefits may be taxed based on a figure called “combined income”. Your
combined income is your adjusted gross income, plus half of your Social security benefits, plus
a non taxable interests such as earning from municipal bonds. After calculating your combined
income, the IRS may determine that up to 85% of your benefits are taxable.
If you need help answering these questions, please, give me a call or fill out this form.