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Social Security Basics -- 5 Things to Think About Before You Apply
Townhall.com ^ | May 3, 2014 | Carrie Schwab Pomerantz

Posted on 05/03/2014 9:55:59 AM PDT by Kaslin

Dear Carrie: Several of my friends and I (all in our early 60s) are understandably thinking about Social Security. Everyone seems to have different ideas -- and different information -- about when to apply for benefits, how to apply, and how much we can expect to get. Can you give us a straightforward answer on what we should know? -- A Reader

Dear Reader: Since Social Security plays such a big part in people's lives, you'd think we'd have a better idea about how it all works. But on the contrary, a lot of folks don't fully understand their benefits or, more importantly, how to maximize them.

It's essential to take some time to consider your options before you apply, or you may miss out on thousands of dollars over your lifetime. There's a lot of helpful and detailed information at socialsecurity.gov, but for starters, here are five important things you and your friends should focus on:

1. UNDERSTAND HOW TIMING AFFECTS BENEFITS

With all the talk about the future viability of Social Security, many people think they should apply for benefits as soon as possible. But there's more to it.

In a nutshell, if you file at the earliest possible age, 62, your benefit is permanently reduced. If you wait until your full retirement age (FRA), which would be 66 for you and your friends, you collect 33 percent more. Wait until 70, and your benefit goes up by a total of 76 percent!

There's a point where total benefits balance out (a larger check for a shorter time), but, generally speaking, if you're healthy and longevity runs in your family, you'll increase your total lifetime benefits by postponing your start date.

2. FACTOR IN REDUCTIONS -- AND TAXES -- IF YOU CONTINUE TO WORK

In terms of timing, you also have to consider your work plans. If you take benefits before your FRA, and your income exceeds certain limits, part of your benefit is temporarily withheld. In 2014, $1 dollar in benefits is withheld for every $2 you earn above $15,480. The year you reach your FRA, $1 is deducted for every $3 you earn above $41,400. However, you do get this money back as an increased monthly benefit once you reach your FRA.

Taxes are another thing. Regardless of when you take benefits, 50 to 85 percent of your Social Security income may be taxable if your modified adjusted gross income reaches certain levels. For 2014, that's between $25,000 and $34,000 for individuals, and between $32,000 and $44,000 for married couples filing jointly. Your benefit might also bump you into a higher tax bracket. Best to discuss this with your tax adviser.

3. STRATEGIZE WITH YOUR SPOUSE

Working as a team, married couples have some choices that can significantly boost their combined benefit. That's because of the spousal benefit allowing one spouse to take up to 50 percent of the other's benefit (as long as that spouse has already filed), while letting his or her own continue to grow.

There are a number of ways to do this. For instance, in a strategy sometimes called the "62/70 split," the lower-earning spouse takes Social Security as early as age 62, while the higher earner delays until 70. In the meantime, the higher earner can take the spousal benefit as a bonus.

Another option is for the higher-earning spouse to apply for benefits at FRA, and then suspend them. The lower-earning spouse could then collect a spousal benefit based on the higher earner's record, while the higher earner's benefit continues to grow. This can get complicated, so, again, best to consult with a financial professional. But it's definitely worth exploring!

4. FIND OUT HOW MUCH YOU'LL COLLECT

Everyone age 60 or older who hasn't yet applied for benefits is mailed a yearly Social Security statement. This provides an estimate of retirement and disability benefits, as well as survivor benefits. Or you can create a personal account at socialsecurity.gov to access your statement. The site also has a number of calculators, which you can use to explore how different start dates or continuing to earn would affect your benefit.

For 2014, the maximum monthly benefit for a worker at FRA is $2,642. The estimated average monthly benefit is $1,294. And FYI, you can apply for benefits online when you're ready -- up to four months before your start date.

5. BE AWARE OF SURVIVOR BENEFITS, BENEFITS FOR EX-SPOUSES AND DISABILITY BENEFITS

While exploring timing and benefit amounts, it's also important to be aware that:

--At FRA, a widow or widower can collect up to 100 percent of a spouse's benefit (or reduced benefits at age 60). If you collect early and receive reduced benefits, that reduction also applies to your surviving spouse.

--Under certain circumstances, you can collect benefits based on an ex-spouse's record without affecting what your ex or your ex's current spouse can collect.

--If you're disabled and under full retirement age, you and your family members may qualify for disability benefits.

These basics are the same for everyone, but the individual decisions you and your friends make may well be very different. You'll each have to thoughtfully consider your choices based on your circumstances. In the meantime, this information should give you a lot more to talk about!


TOPICS: Business/Economy; Culture/Society; Government
KEYWORDS: socialsecurity; ssapplication; ssbenefits
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1 posted on 05/03/2014 9:55:59 AM PDT by Kaslin
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To: Kaslin

#5 is interesting. A widow or widower can collect benefits from the deceased spouse’s benefits?

I was widowed at age 52, but have continued working all these years. I will qualify for social security based on my own earnings. Do they really mean to say that I can also collect benefits based on my deceased wife’s earnings record?


2 posted on 05/03/2014 10:02:27 AM PDT by Dilbert San Diego
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To: Kaslin

Sign up as soon as you can. If you don’t........it may not even be there later or they will change the rules again on you where you receive less anyway after waiting to receive more. Or you get sick and die and see very little or not a dime.

A bird in the hand is worth 2 in the bush should be the mantra with the politicians we have on both sides.

Just my humble opinion.


3 posted on 05/03/2014 10:03:34 AM PDT by sheana
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To: sheana

I agree.


4 posted on 05/03/2014 10:04:20 AM PDT by mylife
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To: sheana

I agree with you. And I agree based on likely changes in the law yet to come. My bet is that they will grandfather in anybody who is already collecting Social Security, at the time that changes in benefits are made. But those who have not yet entered the system to collect benefits will see those benefits reduced.

I did a simple calculation, and found that, if you start collecting at age 62, that it would take you up to age 77 before you would have collected more by waiting until age 70 to collect that higher benefit.

Of course, that was a simple calculation ,not taking into account reduced benefits if you were still working at age 62 .


5 posted on 05/03/2014 10:08:57 AM PDT by Dilbert San Diego
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To: mylife

me too.if ya don’t need it take it and DCA into something like VWINX


6 posted on 05/03/2014 10:10:55 AM PDT by CGASMIA68
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To: mylife

me too.if ya don’t need it take it and DCA into something like VWINX


7 posted on 05/03/2014 10:11:00 AM PDT by CGASMIA68
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To: sheana

When you consider the huge unfunded liabilities in Social Security, we know that changes have to be made.

Politicos of both parties have kicked the can down the road, and continue to do so. But something has to give, likely in the next 10 to 20 years.

Benefits will be reduced.
Social Security taxes on workers will be increased.
The retirement age will be increased.
Social Security will become a means tested program, so that those of us with IRAs and 401Ks and other savings will see our benefits reduced.

Some combination of the above actions will happen.


8 posted on 05/03/2014 10:11:21 AM PDT by Dilbert San Diego
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To: Dilbert San Diego

You cannot take your Social Security and your spouse’s at the same time. If your spouse made the same amount of money as you, you could take 100 of your spouse’s social security at 66 and start taking your own later.

But as I understand it from a luncheon I attended some years ago with Social Security experts, when you started taking your own it would be at the same percentage that you were taking your spouse’s.

It is amazing to me that SS is always short of money, since so many parents and spouses die young and there is no way to
actually reclaim their benefits. Also, it would seem that as the Baby Boomers die off, unused benefits would be in the fund for the smaller generations of the future to use.

Where do all these lost benefits go? True, the thing is a Ponzi scheme, but one would thing as the larger generations die off with unused benefits, there would be more for the ounger ones


9 posted on 05/03/2014 10:15:30 AM PDT by angry elephant (Endangered species in Seattle)
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To: Dilbert San Diego

Surviving spouse is entitled to draw Social Security benefits based upon the higher of the two. If your deceased spouse received or would have received larger payments, then you can claim that. If not, then you stick with your own.


10 posted on 05/03/2014 10:16:24 AM PDT by RegulatorCountry
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To: Kaslin

That yearly mailed report is now past history.


11 posted on 05/03/2014 10:16:49 AM PDT by Old Flat Toad (Pima County, home of the single vehicle accident with 40 victims.)
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To: Dilbert San Diego

I look for the crooks in DC to remove the earnings cap on “contributions” They will tell the public that ‘everyone understands” SocSec was intended to be redistribution scheme form the beginning — and say it with a straight face

Do that, maybe raise the retirement age by a year or two, and it will be solvent for a long time. Heck, they might even raid it again for general fund expenses.


12 posted on 05/03/2014 10:17:05 AM PDT by BenLurkin (This is not a statement of fact. It is either opinion or satire; or both.)
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To: angry elephant

Since all the money goes to the general account it gets dissapeared.


13 posted on 05/03/2014 10:17:23 AM PDT by mylife
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To: mylife

So I guess basically the administration takes the money withheld from workers and hands it out to welfare recipients, illegal immigrants, and others of the taking class.

Another form of death tax.


14 posted on 05/03/2014 10:21:09 AM PDT by angry elephant (Endangered species in Seattle)
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To: Kaslin

If you have children (own or adopted) under 18, they will get additional benefits when you sign up for SS.


15 posted on 05/03/2014 10:21:37 AM PDT by entropy12 (Democrats win WH for one reason...welfare checks, food stamps and 143 more giveaways)
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To: angry elephant

Money that is not actively being drawn on is pinched for whatever they like.
The Political crisis du jour.

But if you are drawing it, they aren’t likely to cut you off.


16 posted on 05/03/2014 10:24:17 AM PDT by mylife
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To: All

I say get it while you can.
After all, it is YOUR money.


17 posted on 05/03/2014 10:26:10 AM PDT by mylife
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To: Kaslin

What many do not know, if you prefer to not accept Medicare, they will deny your SS.

When I went FRA and decided to start taking back 45 years of “retirement savings”, the SS REp brought up Medicare, I told them I had personal medical insurance I was happy with and did not want Medicare, the SS Rep said “no Medicare, no SS”. I could have paid the Part A and kept my person insurance, but found out that as soon as I signed up for Medicare, even the minimum, my personal insurance was cancelled.


18 posted on 05/03/2014 10:26:47 AM PDT by X-spurt (CRUZ missile - armed and ready.)
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To: Kaslin
#6 - If you have prior military service, take your form DD214 with you, it will increase your check slightly. I say "slightly" because for 4 years active duty and 2 years reserve, I received an increase of $13 on my monthly check but what the heck, I'd rather have that $13 than not.
19 posted on 05/03/2014 10:32:15 AM PDT by Graybeard58 (If any man love not the Lord Jesus Christ, let him be Anathema Maranatha. 1 Cor 16: 32)
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To: Kaslin

The biggest scare to me in this area is the “Income Adjustment” for wealthier individuals that is a constant discussion in the political circles. The obvious problem is who defines wealth and on what basis. With some of the more extreme theorists, the chance that the government would look at total family assets is scary! I have to pay for my cousin’s retirement because we share grandparents?

Even so, to think that Social Security could be eliminated is a total lie, told by the Democrats to scare their base into staying on the liberal plantation. The reason it is a lie is that the senior citizen demographic is that they VOTE and that is fatal to anyone who messes with this ‘third rail’!

Still, for me with parents and grandparents who lived far past the Biblical (Psalm 90:10) “Three Score and Ten”, it is logical to wait for the age 70 start. What makes Social Security unique is its “Inflation Adjustment” that is almost unique amongst retirement income streams. So it makes sense, unless other factors change, to wait for that draw until it maximizes.


20 posted on 05/03/2014 10:32:42 AM PDT by SES1066 (Quality, Speed or Economical - Any 2 of 3 except in government - 1 at best but never #3!)
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To: Graybeard58
Good to know that being in a war zone will net you and extra $13 a month ☺

That's two packs of ciggies!

21 posted on 05/03/2014 10:36:19 AM PDT by mylife
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To: Dilbert San Diego; elephant
Just from personal observation and may not apply in all cases:

My sister, aged 73 passed away in Jan, this year, my b.i.l. is indeed collecting one half of my sister's s.s. check plus 100% of his own.

I was suprised at this.

22 posted on 05/03/2014 10:37:02 AM PDT by Graybeard58 (If any man love not the Lord Jesus Christ, let him be Anathema Maranatha. 1 Cor 16: 32)
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23 posted on 05/03/2014 10:39:36 AM PDT by RedMDer (May we always be happy and may our enemies always know it. - Sarah Palin, 10-18-2010)
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To: sheana

I agree and plan to do so.


24 posted on 05/03/2014 10:42:47 AM PDT by gattaca (The heart of the wise inclines to the right, but the heart of the fool to the left. Ecclesiastes10:2)
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To: Kaslin
Helpful:

U.S. Social Security Retirement Estimated Monthly Payments Chart

Includes tips about filling out forms.

Includes a table illustrating "How Your Social Security Benefit is Reduced" by taking early retirement.

25 posted on 05/03/2014 10:42:57 AM PDT by First_Salute (May God save our democratic-republican government, from a government by judiciary.)
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To: entropy12
If you have children (own or adopted) under 18, they will get additional benefits when you sign up for SS.

Yep, my wife and I adopted 2 children 2 years ago, who had been with us for 4 years prior, they each recieve a check equal to one half of mine, effectively doubling my s.s. check, all goes directly into my bank account.

(until the age of 19, if they are still in school)

26 posted on 05/03/2014 10:43:54 AM PDT by Graybeard58 (If any man love not the Lord Jesus Christ, let him be Anathema Maranatha. 1 Cor 16: 32)
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To: Kaslin
Given my medical history it's far from certain that I'll live to a ripe old age.And OsamaObamaCare makes it even *less* likely.as a result I applied when I was first eligible.It's a roll of the dice...the worst case scenario being that my decision will result in tough times in my last few years.
27 posted on 05/03/2014 10:45:37 AM PDT by Gay State Conservative (Stalin Blamed The Kulaks,Obama Blames The Tea Party)
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To: X-spurt

As you may or may not know, one incurs a lifetime penalty for delaying Medicare enrollment. My mother had excellent health insurance—she worked for an insurance company—and didn’t apply for Medicare for several years. She will pay increased monthly payments for the rest of her life.


28 posted on 05/03/2014 10:45:40 AM PDT by hanamizu
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To: hanamizu

My step father, a Korean war vet, relied on the V.A. until he was about 80 years old, got disgusted with the V.A. and signed up for medicare, his premiums were double mine. He’s now deceased. I can vouch for the fact that V.A. care was lousy to him. (St. Louis area)


29 posted on 05/03/2014 10:51:43 AM PDT by Graybeard58 (If any man love not the Lord Jesus Christ, let him be Anathema Maranatha. 1 Cor 16: 32)
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To: Dilbert San Diego

Exactly the reason why I will apply at age 62.


30 posted on 05/03/2014 10:56:02 AM PDT by ops33 (Senior Master Sergeant, USAF (Retired))
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To: Graybeard58

Thank you, I did not know that


31 posted on 05/03/2014 10:57:19 AM PDT by ops33 (Senior Master Sergeant, USAF (Retired))
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To: angry elephant

Social Security is always short because there is no fund. It all goes into the general fund and gets spent. If it was an actual fund ( not counting the welfare programs that are a part of SS) and drawing interest they may have been able to stay in the black.


32 posted on 05/03/2014 11:00:28 AM PDT by sheana
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To: angry elephant

unused benefits would be in the fund...Your first mistake is to believe there IS a fund. There is NO SUCH thing, the government uses last months payment to give away to foreign countries, welfare, statues of camels, etc., etc. This month’s payments go to SS recipients and THEN to foreign countries, camels and welfare. See? It all works out in the end.


33 posted on 05/03/2014 11:12:04 AM PDT by Safetgiver ( Islam makes barbarism look genteel.)
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To: Safetgiver

Can you collect at age 62 and still work perhaps part-time?


34 posted on 05/03/2014 11:13:24 AM PDT by savage woman (see ya in Washington May 16th...)
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To: mylife

unused benefits would be in the fund....NO! NO! NO! The SCOTUS said it is NOT. This was FDR’s means to introduce us all into the socialism he fervently desired.


35 posted on 05/03/2014 11:18:12 AM PDT by Safetgiver ( Islam makes barbarism look genteel.)
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To: savage woman

Can you collect at age 62 and still work perhaps part-time?...Yes. But be sure to stay under the yearly maximum allowed (presently about $15,500. If you go over, the will withhold the overage from one (or more) of your checks.


36 posted on 05/03/2014 11:21:00 AM PDT by Safetgiver ( Islam makes barbarism look genteel.)
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To: Safetgiver

Exactly.


37 posted on 05/03/2014 11:22:24 AM PDT by mylife
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To: Safetgiver

Thank you..


38 posted on 05/03/2014 11:25:15 AM PDT by savage woman (see ya in Washington May 16th...)
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To: Old Flat Toad

That yearly mailed report is now past history.

**************************************************

I read a report yesterday on MSN Money that SS is going to resume sending the paper statements to people starting at age 25, then every 5 years after. If you are now 60, you will receive a paper statement.


39 posted on 05/03/2014 1:08:51 PM PDT by wayoverthehill
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To: savage woman

Can you collect at age 62 and still work perhaps part-time?

*********************************************************

Yes you can but your earnings are limited. This year the amount you can earn without losing SS benefits is $15,400 & change. Once you hit full retirement age (66 or 67 depending on your year of birth) you can earn as much as you want. I started collecting at age 62 and have continued to work part time for 12 years now with no loss of benefits.


40 posted on 05/03/2014 1:14:26 PM PDT by wayoverthehill
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To: wayoverthehill; Old Flat Toad
Thanks for the info.

I found this link: Social Security to resume benefits statement mailings

41 posted on 05/03/2014 1:18:27 PM PDT by MUDDOG
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To: BenLurkin
I look for the crooks in DC to remove the earnings cap....

They avoided doing that even when Obama was spouting his "tax the rich" routine. I suspect that's because the ruling class does not want to raise taxes with something that con't be overcome with deductions.

I don't have a problem with no cap. In government worker's pensions, everybody pays the percentage on their total income. It's a flat tax. If that doesn't happen, those with higher income are paying a lower percentage of it into Social Security.

42 posted on 05/03/2014 1:26:35 PM PDT by grania
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To: mylife

I agree, cash is king.


43 posted on 05/03/2014 1:57:53 PM PDT by meridenite
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To: sheana

“A bird in the hand is worth 2 in the bush should be the mantra with the politicians we have on both sides.”

Understandable; another issue is the devaluation of the larger “later” payout. It is already being done now.


44 posted on 05/03/2014 2:51:38 PM PDT by kearnyirish2 (Affirmative action is economic warfare against white males (and therefore white families).)
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To: angry elephant

“It is amazing to me that SS is always short of money, since so many parents and spouses die young and there is no way to actually reclaim their benefits.”

It isn;t as though though funds had been set aside, and now nobody needs them; the money those people contributed thirty years ago was spen paying retirees...thirty years ago.


45 posted on 05/03/2014 2:53:47 PM PDT by kearnyirish2 (Affirmative action is economic warfare against white males (and therefore white families).)
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To: SES1066

“With some of the more extreme theorists, the chance that the government would look at total family assets is scary!”

This is already done for financial aid for college; if they are income-producing assets then it is done for taxation purposes as well. The left sees nothing extreme about factoring this into payments.


46 posted on 05/03/2014 2:55:37 PM PDT by kearnyirish2 (Affirmative action is economic warfare against white males (and therefore white families).)
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To: Old Flat Toad

“That yearly mailed report is now past history.”

I’m not surprised; I couldn’t see how long they could keep promising so much to so many (and listing their historical contributions to boot).


47 posted on 05/03/2014 2:58:48 PM PDT by kearnyirish2 (Affirmative action is economic warfare against white males (and therefore white families).)
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To: BenLurkin

“I look for the crooks in DC to remove the earnings cap on “contributions”

They already increase it, and over the last 20 years I doubt wage increases kept up with the BS increases put forth by government.


48 posted on 05/03/2014 3:00:57 PM PDT by kearnyirish2 (Affirmative action is economic warfare against white males (and therefore white families).)
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To: Dilbert San Diego

Call Social Security and make an appointment... they’ll explain it all...


49 posted on 05/03/2014 3:11:23 PM PDT by GOPJ
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To: wayoverthehill

Thank you.


50 posted on 05/03/2014 4:32:07 PM PDT by savage woman (see ya in Washington May 16th...)
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