Clients report to RubinBrown Wealth Advisors that Social Security serves as a source of great confusion, especially given the changes that are constantly being made.
The following represents the most frequently asked questions, as well as answers provided by the RubinBrown Wealth Advisory Services group.
I used to receive a social security statement each year in the mail; why don’t I receive this anymore?
As a cost saving measure in 2011, the Social Security Administration stopped mailing statements to recipients. You can register for an account and access your statement online at www.ssa.gov/myaccount.
When is my full retirement age for social security purposes?
- If you were born after 1959, your full retirement age is 67
- If you were born before 1955, your full retirement age is 66
- If you were born between 1955 and 1959, your full retirement age is between 66 and 2 months (born in 1955) and 66 and 10 months (born in 1959)
When am I entitled to a benefit?
Assuming you are entitled to a retirement benefit, you can begin collecting your benefit at age 62. However, if you elect to receive a benefit at age 62, your benefit will be reduced by 25% – 30%, depending on your full retirement age.
Your benefit increases each month you delay collecting your benefit from age 62 to your full retirement age. Also, if you elect to delay your benefit past your full retirement date, your benefit will increase by 8% per year until you reach age 70.
Am I penalized if I collect social security benefits and continue to work?
If you begin collecting social security benefits before your full retirement age and continue to work, your social security benefits will be subjected to an earnings test. If you have attained your full retirement age, the earnings test does not apply.
In 2017, the annual exempt earnings amount is $16,920. If you are working and collecting early retirement social security benefits, the Social Security Administration will withhold $1 of benefits for every $2 you earn above $16,920.
For example, if you are collecting $15,000 in early retirement social security benefits and earn $40,000, the Social Security Administration will reduce your benefit by $11,540.
My spouse’s social security benefit is much less than mine. Is my spouse entitled to a benefit based on my earnings record?
Yes, spouses are entitled to the greater of their own benefit or 50% of their spouse’s full retirement benefit, which is called a spousal benefit. Spousal benefits are reduced if collected before attaining full retirement age.
Can my spouse start taking a spousal benefit before I collect mine?
If your spouse does not have a benefit based on their earnings record, he or she can’t collect a spousal benefit until you start collecting.
How much will my spouse’s social security benefit be if my spouse outlives me?
Assuming your spouse has reached their full retirement age, he or she will receive the greater of his or her own benefit or yours.
Survivors can begin collecting benefits as early as age 60 but their survivor’s benefit will be reduced if they begin collecting before their full retirement age.
I am divorced. Can I receive
benefits based on my former spouse’s earnings record?
If you do not remarry and were married for at least 10 straight years to your former spouse, you are entitled to a spousal benefit of 50% of your former spouse’s full retirement benefit if greater than your own benefit.
If you remarry, you can’t receive benefits on your former spouse unless your current marriage ends in divorce, death or annulment.
My former spouse passed away. Am I entitled to a survivor’s benefit?
Yes, if your former spouse passes away and you were married for at least 10 straight years, you are entitled to a survivor’s benefit as early as age 60, at a reduced benefit (if you wait until your full retirement age to collect the survivor benefit, there is no reduction).
If you remarry before 60, you are not entitled to a survivor’s benefit on your former spouse unless your current marriage ends in divorce, death or annulment.
If you reach full retirement age and are eligible for a survivor’s benefit, you have the option of collecting a survivor’s benefit and allowing your own retirement benefit to accrue. If your own retirement benefit exceeds your survivor’s benefit, you can switch to your own benefit.
I have heard about strategies such as ‘File and Suspend’ and ‘File and Restrict’ to maximize benefits. Are these strategies still available?
The Bipartisan Budget Act of 2015 eliminated the ability for couples to employ the file and suspend strategy effective April 30, 2016.
If you were born on or before January 1, 1954, you still may have the option to employ the file and restrict strategy.
When should I start taking my social security benefit?
The decision of when to start taking benefits can have a dramatic impact on your ability to meet your needs in retirement. This decision should be made as part of a comprehensive financial plan. RubinBrown Wealth Advisors are happy to assist you with this process.
RubinBrown Advisors help clients identify, prioritize and achieve
their financial goals and objectives utilizing an experienced group of
professionals that can integrate income taxes, estate taxes, financial
planning, risk management and investment management needs, all in one
place, throughout their lifetimes.
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