5 Things you Need to Know About Social Security Before Starting Benefits

Social Security touches every stage of life—from your first paycheck to becoming an important part of your retirement income. But how much do you know about it? When should you start taking benefits? How much will it cover in retirement? And perhaps most importantly, will Social Security still be there when you need it? These are crucial questions to consider as you plan for the future. Let’s dive into the 5 essential things you should know before claiming your benefits. 

Learn More: Will Social Security Be There For Me? 

1. Learn how much you’re eligible to receive

Social Security benefits generally replace about 40% of your pre-retirement income, but it’s essential to determine exactly how much you’ll receive. To get a clear picture of your estimated benefits, visit www.ssa.gov/myaccount. Once logged into your account, you can view a detailed summary of your projected monthly income.

2. When to start Social Security benefits

The ideal time to start receiving Social Security benefits varies for each individual, so carefully consider your decision. Claiming benefits too early may result in reduced income during your later years while delaying your benefits could deplete your other retirement savings or lead to the unfortunate possibility of passing away before accessing your earned benefits. Finding the right balance is essential to maximizing your Social Security income and possibly ensuring a secure financial future.

3. Taxable Income 

Once you decide to start receiving Social Security benefits, be prepared for an increase in your taxable income. While you can continue to work while collecting benefits, you’ll be subject to the earnings test. For 2023, your benefits are reduced by $1 for every $2 you earn over the limit of $21,240. Once you reach your full retirement age, the reduction changes to $1 for every $3 earned over $56,520. However, don’t worry—any earnings above these limits are not lost; instead, they are credited to your account, which could increase your benefits once you reach full retirement age. Understanding these taxable income rules is crucial for maximizing your Social Security income.

4. Spousal Benefits 

If you lack sufficient employment history to qualify for Social Security benefits, you may still be eligible for spousal benefits. To qualify, you must be married to someone who has worked and is currently receiving benefits. Additionally, the non-working spouse must be at least 62 years old. While spousal benefits generally mirror the standard benefits, there are a few key exceptions to note: 

• Growth Limitations: Spousal benefits stop increasing once the non-working spouse reaches full retirement age, at which point they receive 50% of the working spouse’s benefit. 

• Survivor Benefits: Your spouse may be able to claim your benefits if you die. 

• Divorced Couples: Even divorced individuals can qualify for spousal benefits, provided certain conditions are met. 

It’s essential to evaluate your situation to understand how much income you may be eligible to receive when considering Social Security benefits. 

Learn More: Top 10 Facts About Social Security 

5. You have a limited time to change your mind

Once you choose to start your Social Security benefits, regardless of your age, you have a one-year window to make any changes. Twelve months to determine if your decision to activate your benefits was the right one. Therefore, it’s crucial to educate yourself on Social Security and understand how it will impact your retirement income. Being well-informed will help you navigate this important decision and optimize your financial future. A financial advisor may be able to help you make the best decision for your retirement. Reach out to 210 Financial for a complementary 210 Financial Blueprint Review or give us a call at (309) 263-1333.   

Conclusion:  

Navigating the complexities of Social Security can significantly impact your retirement income, making it important to understand the benefits, eligibility requirements, and the best timing for you. Whether you’re considering spousal benefits or how to manage your taxable income, being well-informed empowers you to make decisions that align with your financial goals. 

At 210 Financial, our experienced advisors, are here to help you navigate Social Security and ensure you make the most informed choice when activating your benefits. Don’t hesitate to reach out to us for personalized guidance tailored to your unique circumstances. Contact us today at (309) 263-1333 to potentially start your journey toward a financially secure retirement!   

 

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