How can I get an estimate of my Social Security benefits?
The Social Security Administration provides an “Earnings and Benefit Estimate Statement” for all workers age 25 or older. The statement provides you with a history of your earnings and projected benefits. You can get a copy of Social Security Statement online at www.socialsecurity.gov. or www.ssa.gov. You must create an online account. Once logged in, you will be able to view and print your “Earnings and Benefit Statement.” The online statement provides eligible workers with secure and convenient access to their Social Security earnings and benefits information. It also provides estimates for retirement, disability and survivors benefits, making the statement an important financial planning tool. In addition, the portal includes links to information about other online services, such as, applications for retirement, disability, and Medicare.
There are some calculators on the websites that allow you to run estimates using your anticipated future earnings.
Should I retire now at age 62 and collect Social Security benefits?
There’s no right time to begin collecting Social Security benefits. Unfortunately, we cannot answer that question without a detailed analysis of a person’s individual situation. In 2013, if you begin benefits early at age 62, you should have a 25% reduction in benefits. The reduction is based on how many months you take benefits before you reach full retirement age. The decision may not only affect you, but it could also affect your spouse, if your spouse is eligible for spousal benefits or survivor’s benefits.
What happens if I begin collecting Social Security after full retirement age?
By delaying benefits until after full retirement age you can earn delayed retirement credits. This means you can earn up to 8% a year, until age 70. You could earn 32% more in benefits by delaying Social Security benefits until age 70.
If I continue working after I receive benefits, are my benefits reduced?
At age 62, if you are working and taking Social Security benefits, you can earn up to $15,120 without a reduction in benefits. If your income exceeds that amount, $1 of benefits is withheld for every $2 you earn above the threshold amount. If you are full retirement age in 2013, you can earn $40,080 in the period up to the month before your birthday, without a reduction in benefits. If you earn more, your benefits are reduced by $1 for every $3 you earn above $40,080. Once you reach full retirement age, your income will not reduce your benefits.
What if I change my mind about when to begin Social Security benefits?
You have a limited window to change your mind after you have applied for benefits. You can only cancel your claim to Social Security benefits up to 12 months after you applied. In addition you must repay the benefits paid to you and money withheld from your check to pay Medicare premiums or tax withholding.
I’m getting remarried. How will this affect my Social Security benefits?
Spousal benefits are an option for some retirees. A individual may be entitled to spousal benefits at age 62 if they were married for at least 10 years and the divorced spouse is at least age 62. If you are collecting benefits based on your former spouse’s record, when you remarry, you will no longer be eligible for spousal benefits on your former spouse’s employment record, unless you are marrying a person who is receiving benefits as a widow, widower, parent or disabled adult child. However, if you remarry after age 60 (or after 50 and are disabled), those benefits remain intact, unless you choose to receive the spousal allowance through your new spouse.
If your second marriage ends as a result of death, divorce, or annulment in less than 10 years, you should be eligible to collect benefits on your first spouse’s record.
If you are collecting benefits on your own earnings record, remarriage should not affect your benefit.
Are my Social Security benefits subject to income tax?
Up to 50% of your Social Security benefits may be subject to income tax if your provisional income exceeds $25,000 for an individual, or $32,000 if married and filing jointly. If your provisional income exceeds $34,000 for single, or $44,000 if married filing jointly, up to 85% of your benefits is taxable.
For this calculation, provisional income is half of your Social Security benefit plus your modified adjusted gross income, which includes wages, interest, dividends, taxable pension, tax exempt interest income and amounts earned in a foreign country. Benefits are taxable every year, but the tax is calculated based on your provisional income for the year, so it may vary from year to year.
Will my children receive money from Social Security when I die?
If you have earned at least six Social Security credits during the 13 calendar quarters ending with the calendar quarter of death your children may be eligible for benefits. This is about a year and a half of work where you paid Social Security taxes on your earnings. If you were to die, your children may be eligible for benefits if they are under age 18, age 19 if they are still in high school, or any age if disabled before age 22.
What are the qualifications for retirement benefits?
To be eligible for retirement benefits, you must have earned the required number of Social Security credits. You earn a credit per quarter for every $1,160 you earn. You can earn up to four credits per year if you earn $4,640 a year and pay Social Security taxes on your earnings. Most workers must have 40 credits to be eligible for retirement benefits on their own earnings record.
At Henssler Financial we believe you should Live Ready, which includes understanding the basics of Social Security and the benefits you are eligible for. If you have questions regarding your Social Security strategies, the experts at Henssler Financial will be glad to help. You may call us at 770-429-9166 or email at experts@henssler.com.
Disclosures
This article is meant to provide valuable background information on particular investments, NOT a recommendation to buy. The investments referenced within this article may currently be traded by Henssler Financial. All material presented is compiled from sources believed to be reliable and current, but accuracy cannot be guaranteed. The contents are intended for general information purposes only. Information provided should not be the sole basis in making any decisions and is not intended to replace the advice of a qualified professional, such as a tax consultant, insurance adviser or attorney. Although this material is designed to provide accurate and authoritative information with respect to the subject matter, it may not apply in all situations. Readers are urged to consult with their adviser concerning specific situations and questions. This is not to be construed as an offer to buy or sell any financial instruments. It is not our intention to state, indicate or imply in any manner that current or past results are indicative of future profitability or expectations. As with all investments, there are associated inherent risks. Please obtain and review all financial material carefully before investing. Henssler is not licensed to offer or sell insurance products, and this overview is not to be construed as an offer to purchase any insurance products.
