January 19, 2023

How Do I Get the Most from My Social Security Benefits?

If you’re inching closer to retirement or merely starting to ponder what retirement might look like, this guide is crafted especially for you. Let’s break down those burning questions and equip you with the insights you need to make informed decisions about Social Security.

Why Start Thinking About Social Security Now?

Here’s the kicker: Planning for Social Security isn’t just for those nearing retirement. Even if you’re decades away from retirement, now is the time to start planning. Why? Because the sooner you start, the better you can manage and forecast your financial health. Regularly checking your Social Security earnings record on ssa.gov ensures that every dollar you’ve earned is counted towards your future benefits. It’s all about staying ahead of the game and setting yourself up for a worry-free retirement.

Example: Sarah, aged 35, regularly checks her earnings on ssa.gov and notices an error in her reported income for a year she earned significantly more due to overtime. By correcting this early, she ensures that her future benefit calculations will be based on her actual higher earnings, potentially increasing her Social Security payments when she retires.

What Decides When You Should Claim Social Security?

Deciding when to claim Social Security benefits is a big deal, and several personal factors should guide your decision:

  • Marital Status: Whether you’re flying solo, happily hitched, or have gone through a divorce, your relationship status plays a pivotal role in planning your Social Security strategy.
  • Health and Longevity: Got genes that could give you a long, vibrant life? Holding off on claiming Social Security could mean more financial stability down the line.
  • Career and Income: If you’re raking in substantial income now, you might benefit from delaying your Social Security to maximize future payouts.

Example: Mark, 66, is in good health and his family has a history of longevity. He decides to delay his Social Security benefits until age 70 to increase his monthly payout. By waiting those extra four years, his monthly benefit will grow by approximately 32%, providing him with a significantly larger income as he potentially lives into his late 90s.

Each person’s journey to retirement is unique, and these elements should be carefully considered to tailor a strategy that fits like a glove.

How Does Age Impact Your Social Security Benefits?

Let’s cut to the chase: Tempted to tap into Social Security at 62? It might seem appealing, but it could cost you. By delaying your benefits until 70, you’re looking at beefier monthly checks. This isn’t just about enjoying more cash—it’s about securing your financial future, particularly as healthcare and other costs might climb as you age.

Example: Linda opts to start her Social Security benefits at 62, the earliest possible age. While this gives her immediate access to funds, her monthly benefit is 25% less than if she had waited until her full retirement age of 66. If Linda lives to 85, she’ll receive less money overall than if she had waited those four extra years.

Your Top Social Security Questions Answered

  1. How exactly are my Social Security benefits calculated?
    • It boils down to your 35 highest-earning years, adjusted for inflation. If you’ve worked less than 35 years, zeros fill in the gaps, potentially dragging down your average.
  2. Is Social Security running out of money?
    • Not exactly. While there are funding challenges ahead, it’s unlikely Social Security will dry up completely. However, reforms may be needed to ensure it doesn’t buckle under pressure.
  3. Can I work while getting Social Security?
    • Absolutely, but keep this in mind: if you’re younger than full retirement age and earning more than the yearly limit, your benefits could be reduced temporarily.
  4. What if I’m widowed or divorced?
    • You could be eligible for survivor benefits or benefits based on your ex-spouse’s record if the marriage lasted at least 10 years and you’re currently unmarried.
  5. Will my benefits be taxed?
    • Up to 85% of your benefits could be taxed if your combined income exceeds certain thresholds.
  6. How can married couples maximize their benefits?
    • Think strategically: Often, it makes sense for the higher earner to delay benefits while the lower earner starts theirs earlier. This can optimize your total benefits, especially in terms of survivor benefits.
  7. What’s full retirement age?
    • Full retirement age varies depending on your birth year. For most people, it’s between 66 and 67.
  8. Retirement ages for full Social Security benefits
    • This generally ranges from 66 to 67, depending on when you were born.
  9. What if I take benefits early?
    • Taking benefits early can reduce your monthly payments by up to 30%, depending on how early you start before reaching full retirement age.
  10. What if I delay taking my benefits?
    • Delaying benefits past your full retirement age can increase your monthly benefits up to a certain age, typically 70.
  11. How should I decide when to take benefits?
    • Consider your health, financial needs, life expectancy, and how much you value immediate versus increased future benefits.
  12. What about taxes on Social Security?
    • Your benefits could be taxed based on your income level, with up to 85% of your Social Security being taxable if your combined income exceeds certain thresholds.
  13. What if I change my mind?
    • Social Security allows you to withdraw your application and repay what you have received within 12 months of starting benefits if you decide it wasn’t the right choice.
  14. What is the future of Social Security?
    • While the exact future is uncertain, potential changes could include modifications to benefits, eligibility ages, or taxes to ensure long-term sustainability.

Wrapping Up

Navigating Social Security doesn’t have to be a headache. With the right knowledge and a bit of strategic planning, you can set yourself up for a more secure and enjoyable retirement. However, it’s crucial to remember that every individual’s situation is different, and what works for one person may not be the best strategy for another.

Therefore, don’t go it alone—consider consulting with a certified financial planner. A professional can help assess your unique financial landscape, taking into account your specific goals, needs, and circumstances. They can tailor a plan that not only meets but exceeds your retirement expectations, ensuring you make the most informed decisions about your Social Security benefits.

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1325 Hull Road,

Sandusky, OH 44870

(419) 626-3900

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Elyria, OH 44035

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Madeira Beach, FL 33708

(727) 455-9388

Great Lakes Benefits Inc. is a Financial Advisory firm. Investment Advisory Services are offered by Great Lakes Benefits & Wealth Management, an OH Registered Investment Advisor.

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