Planning for Social Security Retirement

While Social Security Retirement benefits are the cornerstone for many individual retirement plans, it is important for individuals to understand the basics of the program and the importance of planning relative to the timing of the benefit payments.  Social Security benefits are payable as early as age 62 to individuals who have worked and paid in to the system for a minimum of 10 years.  The actual benefit payments are computed using 35 years of earnings.  If an individual does not have 35 years of work, zeroes are added in the computation, resulting in lower overall benefits.

All Social Security benefits (retirement, disability, and survivor) are computed from the Primary Insurance Amount (PIA) which is the value of the benefit computed at Full Retirement Age (FRA).  The full retirement age is 66 if you were born from 1943 to 1954. If you were born from 1955 to 1960, and later, the age at which full retirement benefits are payable increases gradually to age 67.  Starting your Social Security retirement benefits prior to full retirement age will result in reduced benefits.  For example, if you turn age 62 in 2017,  your benefit would be about 25.8 percent lower than it would be at your­­­ full retirement age of 66 and 2 months.

You can choose to delay receipt of your benefits beyond your full retirement age, even if you are not working.  If you do delay, your benefit will increase a certain percentage from the time you reach full retirement age, until you start receiving benefits, or until you reach age 70. The percentage varies depending on your year of birth. For example, if you were born in 1943 or later, Social Security will add 8 percent to your benefit for each year you delay receiving Social Security benefits beyond your full retirement age.

Choosing when to retire is an important and personal decision. No matter the age you retire, you should plan in advance to learn your choices and make the best decision. Sometimes, your choice of a retirement month could mean higher benefit payments for you and your family. In deciding when to retire, remember that financial experts say you’ll need 70 to 80 percent of your pre-retirement income to have a comfortable retirement. Since Social Security replaces only about 40 percent of pre-retirement income for the average worker, having pensions, savings, and investments are very important.

Widows and widowers can receive Social Security benefits as early as age 60, or at age 50, if disabled. Widows and widowers can take reduced benefits on one record, and then switch to full benefits on another record later. If you’re getting Social Security retirement benefits, some members of your family can also receive benefits, including spouses, and children. A divorced spouse can apply for benefits on your Social Security record if the marriage lasted at least 10 years.

Your divorced spouse must be 62 or older and unmarried.

You can continue to work and still receive retirement benefits. Your earnings in (or after) the month you reach your full retirement age won’t reduce your Social Security benefits. Your benefits will be reduced if your earnings exceed certain limits for the months before you reach full retirement age.  About 40 percent of people who get Social Security have to pay income taxes on their benefits.  You should check with your tax preparer to determine the impact of taxation on Social Security benefits.

If you’re not already receiving benefits, you should check about three months before your 65th birthday to sign up for Medicare. You should consider signing up for Medicare even if you don’t plan to retire at age 65.

You should apply for benefits about three months before you want your checks to begin or are ready to retire. If you are considering retirement or Social Security benefits soon, a convenient and informative retirement and/or Medicare consultation with Warren Coble & Associates may be beneficial to learn all your options, including Medicare supplements, drug plans, and advantage plans.

Warren Coble began consulting privately with individuals after a 26 year career with the Social Security Administration where he worked the last 17 years as a Claims Representative, helping individuals understand and apply for Social Security and Medicare benefits.  Now with over 50+ combined years of service, Warren Coble and Associates consultants are uniquely qualified to guide individuals through the maze of Social Security Retirement and Medicare.

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