Social Security can be a confusing piece to the retirement puzzle. Below are a few of the most common questions I get asked when clients talk about Social Security.

Should I start my (or my spouse’s) social security now?

There is a number of factors that can go into this answer, including your age, income history, family longevity, current health and more. You can start your Social Security benefit at age 62, but it will be reduced for each month before your full retirement age (FRA). Your full retirement age differs depending on the year you were born. If you wait to start your benefit until after your FRA, you’ll also get an increase. More on that in a bit.

You’ll also want to consider which spouse has the higher benefit and which one might live longer. When your spouse passes away, you don’t get to keep both benefits, but you will get the keep the larger of the two.

Can I still work and get Social Security?

Yes you can – but your benefit might be reduced depending on how much you are making. At age 62, you are allowed to make $19,650 a year without having your benefits reduced. For every $2 you make over that amount, $1 is reduced from your Social Security benefit.

For example, if you were to start your Social Security benefit at age 62 and it is $1,800 a month and you make $25,000 a year, they will withhold three of your benefit checks.

Here’s the math behind my example: $25,000 (yearly income) – $19,650 (income limit) = $5,350. $5350/$1,800 = 2.97 or about three checks. So if your benefit started in January, you’ll receive your first benefit check in April of that year.

Once you hit full retirement age (FRA) the income limit is removed, so you can earn as much as you want without a reduction in your benefit.

Will Social Security still be around when I retire?

This is a pretty common concern I hear especially from the younger generations. Years ago there was an article that scared a lot of people that said “Social Security was going to run out of money in 20XX.” Basically all the report said was that the extra money in the trust would be exhausted, but retirees would still receive benefits.

The system will most likely need some tweaks down the road, but most of you reading this article probably won’t have to worry about those changes.

Will my benefit be taxed?

This will depend on how much income you earn. A portion of your benefit (either 50% or 85% depending on your income) can be taxed. You’ll want to check with your tax professional to see how much tax you should plan for.

How much will my benefit be if I wait to take it?

In the past, you received a physical statement from the Social Security Department a few months before your birthday. In order to cut back on expenses, the department now only offers an online estimate. You can go online at SSA.gov and set up an online profile that will allow you to see your benefit. There are calculators available on the site that allow to you run different benefit scenarios and see how much your monthly check will be.

If you delay your benefits, you’ll get an increase for each month past your full retirement age. It breaks down to a 0.6% increase that will add up to about 8% a year. You’ll want to start your benefit at age 70, as the increases stop and there is no longer an incentive to wait.

There are a lot of myths out there about Social Security. You’ll want to make sure you have a plan for when to start your benefits and have consulted with your financial planner and tax professional before you start your income. For more Social Security info..check out my previous post.

LPL Tracking #1-05279559

If you need some help crunching the numbers or have other questions about Social Security, feel free to email me at Brian@TheAeroAdvisor.com.