Social Security, the program you may have spent a lifetime paying into, is designed to offer stability, supplemental income, and other valuable benefits that can play a role in your overall financial strategy after you retire. However, the complexity of these benefits tends to generate several frequently asked questions. Here are a few high-level answers to some of the most common questions we’ve received.
1. When Can I Start Collecting Social Security Benefits?
You have the option to claim Social Security as early as age 62. However, your monthly Social Security retirement benefit could be larger by staying in the workforce longer. If you wait until your full retirement age (which varies from 66 to 67, depending on your birth year), you can receive 100% of your monthly retirement benefit. An added advantage of delaying beyond your full retirement age is that the Social Security Administration increases your benefit by up to 8% for each year you wait (up to age 70).1
2. How Does Social Security Impact My Retirement Cash Flow?
While you may have a variety of sources of income to tap into during retirement, Social Security should not be overlooked when preparing your distribution strategy. Here’s a hypothetical example that outlines what it might take to replicate the income you could receive from Social Security:
3. Is Income From Social Security Taxable?
Social Security benefits are taxable, and the rate is based on your income. The Congressional Research Service found that the percentage of all tax returns with taxable Social Security benefits reached 33% in 2017 (the most recent data available). This percentage is expected to increase to more than 50% by 2046. In 1999, fewer than 8% of all taxpayers reported taxable Social Security benefits.2
4. When Should I Start Taking Benefits?
Deciding when to begin taking Social Security is a critical decision and one of our most common questions. It may seem straightforward, but it’s more complex than it looks. You’ll want to consider your employment status (if you’re still working), your health, and if you’re married and if your spouse anticipates drawing benefits. This is an important decision, so we’re here to help you better understand how Social Security plays a role in your overall retirement distribution strategy.
Suppose you or anyone you know have any questions about Social Security and its role in your retirement income strategy. In that case, we’d love to schedule a time to meet and discuss the specifics of your situation. Our team is passionate about helping clients understand Social Security and highly experienced in showing individuals and families how they can make informed decisions that can positively impact their financial future.
1. Nerdwallet.com, May 5, 2023
This material was developed and produced by FMG Suite to provide information on a topic that may be of interest. FMG Suite is not affiliated with the named broker-dealer, state- or SEC-registered investment advisory firm.
Social Security - Answers to Your Most Common Questions
September 12, 2023