For most Americans preparing for retirement, Social Security is an important component of the overall retirement income strategy. There are two basic benefits available: retirement and disability. You are generally eligible to file for Social Security retirement benefits if you are 62 or older and you have worked for an employer who has paid into the Social Security system on your behalf for at least 10 years (self-employment tax if you were self-employed).
There are some important options for how and when you received your Social Security benefits. The Social Security administration website also has a number of free, online tools you can use to estimate your benefits based on various criteria.
Set Up Your Online Account
But the first important step you need to take if you are 50 or older is to set up your free My Social Security account online. Setup is easy, it costs nothing, and perhaps most importantly, setting up your free account online makes it harder for identity thieves to file a false claim for benefits using your Social Security number. Using your account, you can also view your Social Security record to make sure it accurately reflects your work and earning history (vital for making sure your benefits are accurately calculated).
Here’s how to set up your account:
- Go to SSA.gov (https://www.ssa.gov/myaccount/)
- Click on “Create an Account”
- Follow the on-screen directions
Your Social Security Timeline
You can apply for Social Security retirement benefits as early as age 62, or as late as you want. However, keep in mind that applying for benefits prior to your full retirement age (65 or older for most Americans) will result in a reduced monthly benefit that will remain at that level for the rest of your life. Following is a list of full retirement age (FRA) for various age cohorts:
As mentioned above, if you take early retirement (between age 62 and your FRA), your lifetime benefit is reduced by 25–30% of your full benefit at FRA.
But you can also increase your benefit by waiting until after FRA to begin receiving payments. For each year beyond your FRA that you delay receiving Social Security benefit payments, your monthly benefit will be increased by 5.5–8%. At age 70 you can receive the maximum benefit available. So, for example, if you have current earnings of $60,000 annually and you were born in 1960, your benefit at FRA (67) would be $1,805. But by waiting until age 70 to receive benefits, your monthly payment would increase to $2,345.
Remember, you can use the free online tools on the Social Security website to estimate your benefit at various ages, based on your actual earnings record with Social Security.
Spousal Benefits
Social Security benefits are also available for non-working spouses, including unmarried, divorced spouses. If you are married, you may be able to claim a benefit based on your spouse’s earnings record. The same age limits apply as those for regular Social Security, except that the increased benefit for delayed filing is not available for spousal benefits. Spousal benefits are limited to half of the working spouse’s benefit at their FRA.
Even if you are divorced, you may still be able to claim spousal benefits if:
- the marriage lasted at least 10 years;
- you are unmarried;
- you are 62 or older;
- your ex-spouse is entitled to Social Security retirement or disability benefits;
- the benefit you are entitled to based on your own work record is less than the benefit available when based on the ex-spouse’s work record.
It’s also important to note that claiming a spousal benefit, whether you are married or divorced, will not affect the benefit of the earning spouse or ex-spouse.
When to Begin Your Application
You should apply for your Social Security benefits four months before you want to begin receiving your monthly payments. The easiest method, according to the Social Security Administration, is to use the online portal available with your free online account. You can also get started by calling your local Social Security office or calling 1-800-772-1213 (M–F, 8:00 a.m.–7:00 p.m., local time).
At Mathis Wealth Management, we want you to be fully equipped with all the information you need to establish a solid plan for your retirement income and lifestyle. If you have questions about your Social Security options, or any other important retirement or financial matter, please contact us; we are here to help. And to learn more, visit our website to read our article, “Embracing Retirement: Live a Fulfilling Retirement Lifestyle.”
For more information on Social Security:
Eligibility: https://www.ssa.gov/retirement/eligibility
Set up your free online account: https://www.ssa.gov/myaccount/
To find the address and telephone information for your nearest Social Security Administration office: https://www.ssa.gov/locator/
Calculating your full retirement age: https://www.ssa.gov/prepare/plan-retirement
Spousal benefits: https://www.ssa.gov/oact/quickcalc/spouse.html
How to apply: https://faq.ssa.gov/en-us/Topic/article/KA-01891
