4. What are my options for Social Security?
Social Security is a complex government program that provides benefits to retired workers and their families. There are a number of different options available when it comes to Social Security. The best option will depend on your individual circumstances, but here are 3 questions most people ask:
1. When can I start receiving retirement benefits?
The full retirement age (FRA) that you can receive your Social Security benefit is at age 67. You can start receiving benefits as early as age 62. However, your benefits will be reduced substantially each year prior to 67 when you decide to claim them. On the flip side, if you delay your benefits, they will increase by 8% for each year you delay up to age 70.
2. How much will my retirement benefits be?
The amount of your retirement benefits will depend on your earnings history. In 2022, the average Social Security benefit was $1,681 per month. You can use the Social Security Administration’s online calculator to estimate your benefits or create an account to view your benefits statement.
3. How will my Social Security be taxed?
You will not owe federal tax on your Social Security benefits if your total income falls below the taxable thresholds set by the IRS. As your combined income increases above a certain threshold (from earning a paycheck, for instance), more of your benefit is subject to income tax, up to a maximum of 85%. There are many strategies to use to keep your taxable income below these thresholds, such as pulling money from a Roth IRA.
As you can see, Social Security is complex and provides several planning opportunities. For anyone retiring within the next 10 years, understanding Social Security, how it works, and how to maximize your benefits is critical. For some people, good Social Security can result in an extra $100,000 or more in lifetime benefits. For more information, you can read our in-depth blog on Social Security or click the "Contact Us Today" button below to get connected with an advisor.