1. If you wait until full retirement age to claim Social Security, you are entitled to full benefits.
- If born between 1943 and 1954, full retirement is age 66
- If born between 1955 and 1959, full retirement gradually climbs to age 67
- If born in 1960 or later, full retirement starts at age 67
2. You can collect as soon as you reach age 62, but doing so will result in a permanent reduction in benefits of as much as 25%.
3. Minor children up to age 18 (or age 19 if a full-time student still in high school) and disabled children of Social Security beneficiaries may be eligible for up to one-half of a parent’s Social Security benefit.
4. How is your Social Security benefit amount determined?
- It is based on your thirty-five years of highest earnings
- To be eligible, you must earn at least 40 credits
- Up to 4 credits can be earned per year
- It takes a minimum of 10 years to qualify for benefits
- For 2015, $1,220 of earnings equals 1 credit; $4,880+ earns the annual maximum of 4 credits
- In 2015, the maximum monthly benefit at full retirement age is $2,663
5. Your benefits receive annual cost-of-living adjustments (COLA) to keep pace with inflation.
6. You may be entitled to spousal benefits of up to 50% of your spouse’s benefit if that 50% is higher than 100% of your benefit.
- This can only be claimed if your spouse has applied for benefits
- If you claim it before your full retirement age, the benefit will be reduced
7. You may be entitled to survivor benefits of 100% of your deceased spouse’s benefit if taken at full retirement age
- Or, you can begin collecting benefits at age 60 at a reduced rate
- If you remarry before age 60, you are not eligible for this benefit
- Eligible children can also receive a survivor benefit of up to 75% of the deceased parent’s benefit
8. Divorced spouse’s may be eligible for spousal benefits if they:
- Were married at least 10 years
- Are at least 62 years of age, and
- Single
- If you remarry after age 60, you may also be eligible for 100% survivor benefit
9. By delaying your benefit beyond full retirement, it (including COLA) will grow steadily by 8% a year until age 70.
- TIP: You can apply for benefits at full retirement age and then immediately suspend them until age 70; this will enable your spouse to claim the spousal benefit before you reach age 70.
10. A portion of your Social Security benefit may be taxable
- This applies to retirement, survivor and disability benefits, but not supplemental security (SSI) payments
- Provisional income is defined as adjusted gross income, excluding Social Security benefits, plus one-half of Social Security benefits, plus tax-exempt interest (i.e., from municipal bonds)
- Up to 50% of the provisional income of single taxpayers earning between $25,000 and $34,000 ($32,000-$44,000 for married filers) may be subject to taxation
- Up to 85% of provisional income of single filers earning over $34,000 ($44,000 for married taxpayers) may be subject to taxation
BONUS FACT: You may lose benefits if you claim them before reaching full retirement age and still continue to work:
- Based on the “earnings test,” you lose $1 in benefits for every $2 of earnings over the earnings limit which is $15,720 for 2015
- These benefits are not permanently lost and will be taken into account at full retirement age to refigure your benefits
We hope you have learned a lot about your Social Security benefits. If you still have questions contact your DS&J accountant to find out more about social security today.