Receiving Social Security Benefits: What You Need to Know

In June 2020, more than one out of every six Americans received Social Security benefits. Workers who pay into Social Security enjoy benefits that increase with inflation, whether they start receiving Social Security in retirement or earlier due to disability.

Here, I’ll explore some commonly asked questions about Social Security benefits to ensure that you're making Social Security work for you. 

At what age should I retire? 

There are pros and cons to retiring at different ages. While you can start receiving Social Security benefits as early as age 62, you may want to wait until full retirement age — or even until age 70 — to claim your benefits. There are many factors to consider as to the best time to start taking social security benefits such as the impact to your investment portfolio, the tax implications, whether you are also paying for higher education at the same time, and your health, just to name a few.

What happens if I retire early and claim my benefits?

If you have other savings or retirement investments that you can use to support your financial needs, it may make sense to wait until age 70 to begin receiving Social Security benefits. If you begin receiving Social Security benefits earlier than age 70, your benefit amount will decrease by a percentage for each month remaining until you reach age 70. 

What if I keep working after I start receiving benefits?

You're permitted to keep working after you begin receiving benefits. However, your Social Security benefits may decrease if you hit the earnings limit (which changes each year) and you're under your full retirement age. Starting with the month you reach full retirement age, there is no limit on how much you can earn and still receive your benefits. However, earnings after your full retirement age still require that you pay social security taxes and could result in higher income taxes and higher Medicare premiums.

What will the amount of my benefit be?

As I mentioned, the longer you wait to claim Social Security benefits, the higher your benefit will be. It's also important to consider your prior earnings. The higher your earnings were while you were working, the greater likelihood the higher your Social Security benefit. Social Security is progressive — people with high earnings will receive a lower percentage of their prior earnings in Social Security benefits than people who earned less, although the dollar amount of their Social Security benefits will be higher. 

Do you have questions about Social Security?

As a  CERTIFIED FINANCIAL PLANNER™ professional, I am here to help you understand your options and make the right decisions for your retirement needs. Reach out to schedule a time for a 15-minute phone call that will allow us to get acquainted and talk about how I can help you with your long-term financial strategy.