Understanding Social Security Benefits

As we continue to ebb ever closer toward the hopefully fun, exciting, and relaxing time of retirement, we begin to dedicate more time and purposeful thought on what exactly that entails. Likely, the younger you looked at retirement as the ultimate goal, while you were begrudgingly waking up too early to head off to a job you despised. Now, however, as you’re getting closer to retirement and realizing that it’s not just a pipedream, there’s likely a lot more uncertainty about what to expect.

While we can’t entirely paint your retirement picture for you, we can help enhance your understanding of some common concerns. In an effort to make this as beneficial to as many of you as possible, we’ll stick with a topic that concerns virtually everyone: Social Security.

Hopefully, you’ve been preparing for retirement for quite some time, and you’re in a position to be capable of supporting your lifestyle without Social Security benefits. If not, it’s not too late, it just might take a little more effort and discipline. Either way, unless you’ve lived off the grid or outside of the U.S. your whole life, you should be able to receive SS benefits during retirement. The main requirement to receive benefits is that you’ve earned enough credits through working, which typically only takes about ten years or so. Other than that, you basically just have to reach the minimum age and apply, and you should be good to go.

For those of you who don’t know, Social Security is essentially a pension provided by the government, paid for by the Social Security taxes that come out of your paycheck. While it does help to supplement your retirement savings, it’s very unlikely that you’ll receive enough of a benefit to fully sustain your ideal lifestyle on its own. For some more information about your Social Security benefits and steps you can take to increase them, you can check out our blog post How to Determine Your Social Security Benefits. 

We frequently get asked the question by clients and prospective clients “When should I start taking my Social Security benefits?” Unfortunately, there’s not a one-size-fits-all answer to that, as there are a lot of factors at play that help us determine the optimal time to begin taking these benefits.

Generally speaking, the longer you’re able to delay receiving benefits, the better off you’ll likely be, as you’ll receive a larger benefit every month. However, factors such as poor health, shorter life expectancy, or the inability to meet current financial obligations could all be reasons to begin receiving benefits earlier. It’s all very dependent on your individual situation, so be sure to consult with professionals who know your story before applying. You will, however, have to begin receiving benefits by age 70, as that’s currently as long as you’re able to defer.

For those of you who are considering easing into retirement, you are allowed to work while receiving your SS benefits. However, there are income limitations if you receive benefits before reaching your full-retirement age, and any income above the limit will reduce your benefits. Once you reach full-retirement age though, you’re free to make as much as you want with no negative impact on your benefits. Full-retirement age is based on your birth year, so you’ll want to visit ssa.gov to learn more. It might even be a good idea to create your Social Security account to get an idea of your current status.

Please feel free to reach out to us if you have any questions about your Social Security benefits, or just want some additional guidance for your retirement.