Social Security Benefit FAQs

Hey welcome to this segment on Social Security benefits FAQs or frequently asked questions. You know we get these common questions all of the time as we’re sitting down and helping people plan for or continue to plan as they have retired. So here are a few of those top hitter that we want to send your way. The first one is, what is your Social Security retirement age? This is what’s known as your retirement age or FRA. And it depends on when you were born. So if you were born in 1937 or earlier, your FRA is 65. If you were born between 1943-1954, your FRA is 66 for the Baby Boomers. If you were born in 1960 or later, your full retirement age is 67. Now you can see there’s some gaps in those ranges right there. And for those of you born between 1938-1942 as well as 1955-1959, you have even more specific retirement ages, okay? So it might be 66 years, four months, okay instead of those whole number months. You could start as early as 62 or you could delay it all the way up until you’re 70 years old. A lot of times clients will say, well when should I start Social Security? You know I want to maximize my cumulative benefits. Unfortunately, the only way to accurately know the answer to that question is to know when you would pass away. And you knew when you were going to pass away, you would know exactly which strategy to use. And we don’t have or want to even think about that. So we have to bring in other factors as we determine when you should start Social Security. The next one is when can I apply for it? You can actually apply at age 61, nine months. And you can go to the Social Security Administration, a local office. You could call 1800-772-1213 or you could go to http://ssa.gov. And those are three different ways that you could apply. Whether it was you know at age 62 or if you wanted to wait until later. The next question is, how much am I going to get? Well that depends on when you start pulling your Social Security. Okay, are you going to start when you’re 62 or are you going to wait until you’re 70? You know if you have reached your full retirement age and you defer until you’re 70, your income will grow on average about 8% a year. And if you wait from 62 until full retirement age, it’s reduced a little bit, but that contractual lifetime income is growing every year that you defer your benefits from starting. They’re going to calculate your highest 35 years of earnings, in order to get that FRA number for you. What is the Social Security tax limit? So what you’ve been doing you probably notice this in your paychecks, is you have been paying 6.2% into Social Security. Your employer has been matching that and also paying 6.2%. If you’re self-employed, then you’d be responsible for the full 12.4% to pay for the Social Security. Then sometimes people ask, well when I start these benefits, are these Social Security benefits going to be taxed? Answer, it depends. Okay, it depends on what’s called your provisional income. And so what they’ll do is they’ll do an equation. They’ll take half of your Social Security benefits and then they add that to your gross income and they come up with a number. And if that number breaks different thresholds, then you’re going to have some of your Social Security benefits start to be considered taxable income. Some of those thresholds to know about your provisional income would be if you’re single, $25K. If you’re a married couple, it’s $32K. And then the next threshold is for single, $34K and up to $44K for couples. And after you break that $44K threshold for your provisional income, you’re going to see that up to 85% of your Social Security benefits could become taxable, okay? What’s your maximum Social Security benefit? If you’re all full retirement age, right now that’s $3,627. Okay and that will adjust down or up depending on when you start Social Security. And finally, when I receive my check? If you were born between the first and the tenth of the month, you’ll get it on the second Wednesday. If you were born the 11th to the 20th, you get it on the third Wednesday. And if you were born on the 21st or later, you get it on the fourth Wednesday of each of month. Have a great day.