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Understanding Social Security

Understanding social security first means you’re eligible for benefits.  To be eligible for benefits, you must have earned 40 calendar quarters of wages.  In addition, those wages must be subject to Social Security tax. The amount of the benefits you receive at full retirement age (FRA) is based on the average of 35 years of your highest earnings.

You may also take Social Security benefits before full retirement age.  However, doing this results in a reduced monthly amount. For example, if you were expecting $2,000 in monthly benefits at FRA, you would receive only 75% of your benefits if you chose to take Social Security at age 62. Therefore, waiting until age 70, means you receive $2,640 or 132% of your benefits.

There are several factors to consider to determine when you file for Social Security benefits:

  • First, do you need Social Security to fill an income gap?
  • Have you been divorced or widowed?
  • Next, will you work during retirement?  (Working and taking benefits prior to FRA opensthe possibility of an earnings penalty in certain situations.)
  • Another factor to consider is whether you’re married.  (For example, when one spouse takes benefits early, benefits for the surviving spouse may be reduced.)
  • Also, what’s your life expectancy and break-even age?  (The traditional way of deciding when to take benefits is to calculate your break-even age.  This is the age you must live beyond for delayed benefits to actually provide a higher lifetime income).
  • Finally, can you afford to wait?

You’ve worked hard to secure a future for yourself and your family.  You’ve also paid your Social Security taxes for decades. Make sure you receive the maximum benefit to which you are entitled.  Download this booklet to help gain a better understanding of Social Security.

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