You and Your Social Security

Retirement income for the long term?

Social Security CardOver the years, there has been much speculation about the health of the Social Security Administration , and in particular, Social Security benefits. To separate fact from fiction, the following Q&A can help you better understand Social Security’s role in your retirement income planning, including how to coordinate it with your employer-sponsored plans and personal savings.

Q. Is the Social Security Administration going broke?

A. No. But according to a Social Security Board of Trustees Report , if changes aren’t made to the funding of the program, it cannot sustain paying full benefits beyond 2037. After that year, and if no changes occur to the program, it can pay about 75 percent of the scheduled payments.

Q. At what age am I eligible to receive Social Security payments?

A. The earliest a worker can start collecting Social Security payments is at age 62. However, there are exceptions to this rule, such as a medical disability that would prevent you from working. A widow/widower may be able to receive full benefits at full retirement age, or reduced benefits as early as age 50.1 The full retirement age, which allows you to receive unreduced benefits, varies by year of birth. For example, if you were born between 1943 and 1954, your full retirement age is 66.2

Q. How much money can I expect to get annually?

A. You can receive an estimate based on your actual Social Security earnings by using the administration’s Social Security Estimator .

Q: What’s the best age at which to begin receiving Social Security retirement benefits?

A: Everyone’s circumstances are different, but here are a few points to keep in mind:

  • The program is designed to pay the same amount for someone with an average life expectancy. So, if you live to the average life expectancy, you can expect to receive the same amount no matter whether you choose to start receiving benefits at age 62 (full retirement age), age 70 or any age in between. Basically, this means you can get lower monthly payments for a longer period of time or higher monthly payments over a shorter period of time.3
  • Factors that can significantly impact your decision to take benefits early or later will include your health, cash needs, and work situation.
  • Many people live beyond average life expectancy, so it’s important to consider how your needs will be met should you or a surviving spouse live 5, 10 or 20 years longer than projected.

Q: Can I keep working while receiving my (or survivor) Social Security benefits?

A: Yes. But if you have not yet reached full retirement age, your Social Security benefits will be reduced to the extent that your earned income exceeds a threshold level. [In most cases, these benefit reductions are not truly lost. Your benefit will be increased at your full retirement age to account for benefits withheld due to earlier earnings.]4 Once you reach your full retirement age, any earned wages will not reduce your benefits. But be aware that you will have to pay Social Security and Medicare tax on your earnings, regardless of your age. What’s more, if you are self-employed while receiving benefits and your business’ net profit is more than $400, you will owe Social Security and Medicare taxes on your earnings.

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