Social Security Preparation
Planning for life after retirement can be daunting if you don’t understand enough about all the moving parts that can affect your income. One of the most misunderstood aspects of retirement is the role of Social Security. 1879 Advisors is here to give you more information on Social Security basics and help you prepare for when the time comes to hang up the gloves and kick back in retirement.
Social Security Basics
What is Social Security?
Social Security is a government program created to provide a financial safety net for people who have retired, require survivor benefits, or disability income. In essence, Social Security is a federal insurance program to which workers contribute (typically through payroll withholdings) over time to receive the benefits upon reaching an age milestone or retirement.
Can I Count on Social Security to Cover My Retirement Expenses?
No. As a general rule, you should never count on Social Security to cover your retirement expenses. Because the returns are generally fairly small, you should think of Social Security as a supplement to other streams of income through your retirement. Planning ahead, contributing to retirement accounts, and investments are the best way to make your money last after you are no longer working.
When Can I Claim My Social Security Benefits?
Starting at age 62, you can start accepting Social Security payments. However, the earlier you claim these benefits, the smaller the checks will be. Were you to choose to wait and defer your Social Security, the benefits will increase by about 8% each year until you reach 70, at which point there will be no more increases.
Do I Still Receive Social Security if I Return to Work?
You can still receive Social Security benefits if you go back to work. However, if you have not reached full retirement age, earning wages could reduce your payments. Here are some things to keep in mind:
1. Returning to work before full retirement age will reduce your benefits by $1 for every $2 you earn above the annual limit. This limit changes year to year, so it is important to keep track.
2. If you reach your full retirement and continue to work, your benefits will be reduced by $1 for every $3 you earn above a higher limit but only until the month you reach your full retirement age.
3. Once you reach your full retirement age, your benefits will no longer be reduced.
How Far in Advance Can I Claim My Benefits?
The Social Security Administration recommends that you apply for benefits four months before you want your payments to begin.
Looking for Help with Social Security Preparation?
1879 Advisors is here to safeguard your long-term finances and guide you through retirement. Get in touch with us today to schedule a consultation!
1879 Advisors does not provide specific tax or legal advice; it is advisable to consult professionals in these areas prior to taking any further action. This information is intended to provide a general guide on this subject matter and should not be regarded as a basis for ascertaining the liability to tax in specific circumstances. In such instances, separate analysis and advice should be taken.