What do you actually know and what do you need to know about Social Security benefits?
Want to make your head spin? Spend some time searching Google with social security questions, or worse, get on IRS.gov or ask your family and friends about Social Security. Maybe you’ve already done that and sworn to yourself that you’ll never do it again.
But that doesn’t mean you shouldn’t educate yourself on the facts. Let’s set politics, emotion, and all assumptions aside and have a practical discussion about Social Security. After all, you’ve probably been paying into the system all your working life and it should be a part of your retirement plan. Also, Social Security provides more than retirement income; it also provides life insurance (payments to young survivors) and disability insurance protection. And to keep it especially challenging, it’s a constantly evolving program with ever-changing rules.
We can’t cover everything you need to know in a single blog, but here are some highlights:
When to start receiving retirement benefits is a critical decision that you should consider carefully. Though you are eligible to start receiving benefits as early as age 62, the longer you wait, the higher your monthly payment will be (until you reach the age of 70). Do a thorough analysis that includes a projection of benefits, your anticipated longevity, and your overall financial situation. No matter when you start receiving Social Security benefits, you should sign up for Medicare at age 65.
Check your Social Security statement for accuracy. It’s easy to get busy with life and toss that annual statement aside, but don’t. Your Social Security benefits are based on your earnings record. Be sure the information on file with the Social Security Administration is accurate, even if you’re years or decades away from retirement. Visit SSA.gov to view your statement on your birthday every year and make any needed corrections immediately.
If you are widowed or divorced, you may qualify for higher benefits based on your spouse’s income. Check to see what the requirements are and if your situation meets them.
If you take Social Security prior to reaching full retirement age and continue working, your benefits may be affected. When you’re younger than full retirement age and earn more than your yearly earnings limit, your benefits may be reduced. Once you reach full retirement age, there is no limit on how much you can earn and still receive full benefits.
Even if you’re young, you still need to understand your Social Security benefits. Though the pessimists predict Social Security won’t be there for today’s younger workers, there are still many reasons to understand it today. For example, a disabled child might be eligible for benefits. And what if they’re wrong and the program is there when you’re ready to use it? You may have made sacrifices (like travel) you didn’t need to when you were young and healthy.
You can learn a lot by browsing around the Social Security website at SSA.gov. You should also consult with a knowledgeable professional who can evaluate how the policies apply to you.
What’s most important to keep in mind is that everyone’s situation is unique, and you need to do a comprehensive analysis to determine the best Social Security strategy for you.
In my article, “Empowered Spending: Your Key to Financial Freedom,” I talked about the importance of knowing the condition of your flocks (a reference to Proverbs 27:23-24). Social Security is one of your flocks, and it can take time and effort to understand it.
The plans of the diligent lead to profit as surely as haste leads to poverty. (Proverbs 21:5, NIV)
Even though researching Social Security is definitely not the most exciting financial chore you’ll ever do, it’s essential to do it before you make irrevocable decisions.
It’s natural to want to look for a simple solution, but this is a 10,000-piece puzzle and you should find a qualified advisor to help you put it together.
If you have questions or need personalized guidance, our team is here to help. Go here to reach out to our office to discuss your unique situation and ensure you’re making informed decisions about your Social Security benefits.
