Social Security is a critical component of the retirement financial strategy for many Americans, so before you begin taking it, you should consider three important questions. The answers may affect whether you make the most of this retirement income source.
When to Start?
You have the choice of starting benefits at age 62, claiming them at your full retirement age or delaying payments. If you claim early, you can expect to receive an amount lower than what you would earn at full retirement, while if you wait until age 70, you can expect to receive a higher benefit than if you begin receiving payments at full retirement age. The decision of when to begin taking benefits may hinge on whether you need the income now or can wait, and if you think your lifespan will be shorter or longer than the average American.
Should I Continue to Work?
Work provides income, personal satisfaction, and may increase your Social Security benefits. However, if you begin taking benefits prior to your full retirement age and continue to work, your benefits will be reduced by $1 for every $2 in earnings above the prevailing annual limit ($15,720 in 2015).¹ If you work during the year in which you attain full retirement age, your benefits will be reduced by $1 for every $3 in earnings over a different annual limit ($41,880 in 2015) until the month you reach full retirement age. After attaining your full retirement age, earned income no longer reduces benefit payments.²
How Can I Maximize My Benefit?
There are a number of ways to maximize your Social Security benefit. The first among these is to simply wait until you turn age 70. However, married couples may also “file and suspend,” which involves a lower earning spouse claiming a spousal benefit based on the higher earning spouse’s earnings record, while the higher earning spouse continues to accrue delayed retirement credits.³ According to a recent law change, “file and suspend,” will no longer be available after April 30, 2016.
Social Security Administration, 2015
Social Security Administration, 2015
Social Security Administration, 2015
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Stangier Wealth Management is a registered investment adviser in the States of Oregon, Texas, and Washington. The adviser may not transact business in states where it is not appropriately registered, excluded or exempted from registration. Individualized responses to persons that involve either the effecting of transaction in securities, or the rendering of personalized investment advice for compensation, will not be made without registration or exemption.
Three important questions to consider before you start taking #SocialSecurity.
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