Social Security Income in Retirement
Social Security is a cornerstone of retirement income. Social Security payments are designed to replace about 40% of your previous earnings, but the amount you'll receive depends on when you start taking Social Security Income. In this post, we will discuss how Social Security works and what factors affect when you should start taking Social-Security payments.
Social Security is a government-sponsored retirement program that provides benefits to retirees, disabled workers, and their families. Social Security payments are based on your lifetime earnings. The more you've earned, the higher your Social Security payment will be. Depending on the age you decide to start your payments you can earn delayed retirement credits that will increase your income.
Social Security benefits can be claimed at any time after reaching 62 years of age. The longer you delay taking the income will earn you delayed retirement credits. If a worker delays their Social security past 70 they no longer earn delayed retirement credits and only receives what they've already earned toward future Social Security payments.
It is important to do your research and speak with a Social Security specialist to make sure you are getting the most out of Social Security benefits. Social security is an essential part of retirement planning, so be sure to look into all the options available to you. There are strategies that can help optimize your Social Security income such as claiming spousal benefits or delaying Social Security payments for as long as possible.
5 Factors that you may want to consider before turning on your Social Security payments.
1. Your Age: Social Security payments are available to those over the age of 62, but you can earn delayed retirement credits if you decide to wait until 70 to start taking Social Security Income. This can lead to an 8-32% increase in Social Security payments depending on your age.
2. Your Retirement Age: Social Security income is designed to replace around 40% of your pre-retirement earnings, so if you were planning on retiring at a younger age it could be beneficial to start Social Security payments earlier in order to help supplement your income and take some pressure off your retirement savings/investments.
3. Work Status: If you are currently employed, or plan on continuing working after reaching Social Security eligibility age, keep in mind that Social Security benefits may be reduced if you continue working and earning more than $21,240 per year (the Social Security Earnings Test Limit for 2023).
4. Spousal Benefits: If you are married (or in some cases previously married), you may be eligible for spousal benefits which can provide an additional amount of Social Security income for both spouses. The best strategy for claiming spousal benefits often depends on the different ages between spouses, so it's important to talk with a Social Security specialist before deciding when and how to take Social Security payments.
5. Current Health: Health can be a factor in determining when the best time is to take Social Security income as well - since Social Security payouts are based on your lifetime earnings and typically paid out over the course of your life if you think that you may not have many years left then it might make sense to start taking benefits earlier rather than later in order receive more total payment.
Social security income in retirement should not be taken lightly! It's important to consider all factors when deciding when to start receiving Social Security Income. Make sure you do your research and talk with a financial advisor before making any decisions about taking Social Security Income in Retirement.
For a ton more information on Social Security and how to Optimize your Social Security plan, check out our webinar recording which is available to you anytime by clicking HERE.