Things You Should Know About Social Security and Your Retirement

With more than 95% of American workers currently covered by Social Security, there are some things about this massive retirement program that you should probably know.  If you’re still in your forties or fifties, you can probably wait a few years to learn the intricacies of Social Security, but if you’ve recently entered your 6th decade on this planet, here are a few things you should be aware of:

• Your social security retirement age can vary, depending on the year you were born. For instance, those born in 1954 or earlier currently have a full retirement age of 66 years, according to the Social Security Administration.  But if you were born in 1957, your full retirement age is 66 years and 6 months. And for those born in 1960 or later, the full retirement age jumps to 67 years.
• While the opportunity to take early retirement benefits beginning at age 62 is available, your benefit payment will be permanently reduced – by up to 30%, depending on when you begin to collect benefits.
• If you wait beyond your specified retirement age to collect benefits, you can increase the amount of benefits received each month.  This increase is equal to 0.667% per month (or 8% per year) for delaying your benefit after reaching your specified retirement age.  You can benefit from the monthly increase by delaying benefits up until the age of 70.
• All Social Security beneficiaries will see a Cost of Living Adjustment (COLA) each year. In addition, the Social Security Administration also has the ability to adjust Medicare premiums each year. Taxpayers in higher income brackets may also be subject to an Income-Related Monthly Adjustment Amount (IRMAA), which is an additional amount that some Medicare Part B and Part D prescription drug coverage beneficiaries pay on top of their standard premium. 
• Increases will also go into effect for annual earnings, so you may be able to earn more money from employment while also collecting Social Security. This applies only to those who have reached their full retirement age. Once you reach your full retirement age, the earnings test is no longer relevant.
• Those that collect Social Security benefits for other reasons such as survivor benefits or Social Security Disability will also see an increase in benefits.
• If you will be collecting benefits for the first time this year, be aware that some of your social security benefits may be taxable, depending on the amount of income earned that year. In fact, up to 85% of Social Security benefits received may be considered taxable income.

Even if you haven’t reached retirement age, it’s never too early to take charge of your Social Security benefits. Visit the Social Security Administration to learn more about Social Security. When there, be sure to sign up for My Social Security, where you can download a copy of your current Social Security Statement, and calculate your retirement benefits using the Retirement Estimator. You can also visit the Benefits Planner feature, which guides you through the entire benefit application process, including applying for disability.

*This content is developed from sources believed to be providing accurate information. The information provided is not written or intended as tax or legal advice and may not be relied on for purposes of avoiding any Federal tax penalties. Individuals are encouraged to seek advice from their own tax or legal counsel. Individuals involved in the estate planning process should work with an estate planning team, including their own personal legal or tax counsel. Neither the information presented nor any opinion expressed constitutes a representation by us of a specific investment or the purchase or sale of any securities. Asset allocation and diversification do not ensure a profit or protect against loss in declining markets.