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The Lowdown on Social Security

Social Security continues to play a critical role in a retirement strategy. Are your taking full advantage of what Social Security offers? Money Mastery Principle 5 teaches the importance of knowing the rules.  Do you know the rules when it comes to taking the most advantage of Social Security?
In this post I’ll share seven keys to enhancing Social Security benefits — keys to help you understand the basics of Social Security, including when you should start taking benefits.  This information takes a deeper look at Social Security and what your next steps should be to maximize benefits.
The bottom line on Social Security.  Eight-nine percent of all retired workers are dependent upon their monthly Social Security income.  If you multiply this monthly benefit out to life expectancy age it will exceed $350,000. What do you think your chances are of receiving this type of income out of Social Security? Go to https://secure.ssa.gov/RIL/SiView.do and create an account to  AccountOnlinedetermine your actual benefits, keeping in mind that those benefits will change with new politicians, new laws, and a troubled system that can’t possibly support everyone who is entitled to use it.
How you qualify to receive Social Security. You must have “40 credits” or have worked about 10 years to be eligible for Social Security.
How Medicare affects Social Security. Regardless of retirement age, Medicare benefits start at age 65 with eligibility the first day of the month you turn age 65.  If you are already receiving Social Security benefits in the month you reach age 65, you are automatically enrolled in Medicare.  If you are not currently receiving Social Security benefits, you must enroll to receive the Medicare benefits.  You should apply three months before reaching age 65.  There are four parts to Medicare:  A for Hospital, B for Medical, C for Medicare Advantage Plans, and Part D for Prescription drug coverage.  Use your browser and search for the specifics.
How taxes affect Social Security. If a single person makes more than $25,000 and a married couple filing jointly earns more than $32,000, their Social Security income benefits will be subject to income tax.  See you tax adviser.  If you can convert 401(k) money to a ROTH IRA, this may lesson the tax applied to the Social Security benefits.
FRABenefitsWhen should benefits be started?  A retired worker can start benefits at age 62, reduced benefits, that is.  You will not get full income until age 66 when you are considered “Full Retirement Age (FRA).” If you can wait until age 70, then you can max out your monthly income.
Working in retirement.  If a person works and earns income before they reach FRA, they will lose $1 per month for every $3 theyFRAReduction earn above $41,880.  After FRA, there is no reduction of benefits.

Spouse and survivor benefits.  A non-qualifying spouse can collect on the record of the spouse who is qualified to receive benefits.  They must be married at least one year, or be the parent of their child.  They can qualify to receive 50 percent of the Primary Insurance Amount of the qualifying spouse.  And the earliest a widow(er) can start receiving Social Security benefits is age 60.  There are also some additional income benefits for a disabled person.  If a person is divorced, they still qualify if they had been married 10 years before the divorce and age 62 or older and are not remarried.
Please remember to seek guidance from the Social Security Administration regarding your particular situation.  This short review is just to highlight what is available to you and hopefully inspire you to plan ahead and maximize your benefits.
If anyone wishes to receive a detailed analysis of their own Social Security optimization, send your request to peter@moneymastery.com. 

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