At some point, we will all retire and claim our Social Security benefits. And yet, because the government bureau is so complicated, most of us still have no idea how the system really works! Don’t plan your retirement based around misconceptions or myths you might have heard from friends. Read on for answers to the most common Social Security questions, and remember that you can call us for help with all of your retirement dilemmas.
Is Social Security even going to be there when I retire? Due to dire news reports about a “shortage” in the Social Security system – particularly during election years, when candidates want to solicit your vote by proposing their “solutions” – you might be under the impression that Social Security is rapidly disappearing. That’s not really true at all. Yes, a certain surplus fund in the system is quickly running dry, but about two-thirds of benefits are actually paid through current tax dollars. In the worst case scenario, you will one day receive only two-thirds of your actual benefits, and younger workers will continue to pay taxes that support the system. But that’s unlikely to happen, because we have until 2035 to fix the budget shortfall.
When can I actually retire? If you plan for an adequate retirement income, you can retire any time you want and are financially ready! But if you’re talking about when you can claim your Social Security benefits, there are three basic things to remember:
- You can claim your regular scheduled benefits upon reaching your full retirement age. This age is based upon your birth date, and falls between 65 and 67 years old.
- You can also claim your benefits as early as age 62, if you don’t mind accepting a permanently reduced check (by about 25 percent).
- You can wait beyond your full retirement age to claim your benefits, and earn a larger check (by about 8 percent for each year you wait, up to age 70).
Can I work after I claim my Social Security benefits? Of course! However, you should remember that if you claim your benefits earlier than full retirement age, some of your checks could be taxed. The money isn’t lost, because you will earn an increased payment once you reach full retirement age. Also, once you’ve reached full retirement age, you can claim your benefits and work as much as you want. Your checks won’t be taxed at that point.
These are some of the most common questions we hear about Social Security. Remember, if you have any other questions about retirement, we’re just a phone call away!
Portions of this article have been excerpted from “Your 3 biggest Social Security questions answered” by Walter Updegrave, CNN Money
Content in this material is for general information only and not intended to provide specific advice or recommendations for any individual.
This information is not intended to be a substitute for specific individualized tax advice. We suggest that you discuss your specific tax issues with a qualified tax advisor.