Over the years I’ve gotten many questions about Social Security. In honor of the 80th Birthday of Social Security, here is my list of the top 5 Social Security questions and answers.
Will Social Security be around when I retire?
Most probably, yes. It may start giving benefits later or tax them more but it’s pretty clear that after working their whole life and paying into the system there would be a very big mutiny among voters if it was completely removed. I don’t know of any politician willing to face the reaction they would get from a horde of angry, voting retirees. It might take some last minute wrangling but I don’t see Social Security going away any time soon.
When should I start drawing Social Security?
It depends. If you or your spouse expect to live a long life, waiting to draw until later will give you a larger monthly payment many years in the future. If you’re married and both you and your spouse are at full retirement age, you can take advantage of drawing a spousal benefit and letting your own benefit grow. If you are divorced you have other choices. Learn about your different options. There are a few calculators on the internet that can give you a broad idea. If you really want to find out what is best for your situation, see a financial advisor who will take your whole financial situation into account and help you figure out your best options.
How do I find out what my Social Security benefit is supposed to be?
Go to www.ssa.gov and register to get access to your benefit information. You can see your expected benefit and check on the earnings record they used to calculate it. If their records don’t match yours, now is the time to get it corrected. And while you’re on the site, you can go to their most popular page – a list of top 10 baby names each year going back to 1897.
What happens if I work while I draw Social Security benefits?
If you are under full retirement age (66 or 67) the Social Security Administration will deduct $1 of benefit for every $2 you earn above $15,720 in 2015. You will still add to your earnings record but having so much deducted from your benefit is a serious consideration if you plan on both working and drawing benefits before full retirement age. Once you reach full retirement age, the penalty is removed and you’ll only be charged regular income taxes for working and drawing benefits.
Do I have to pay taxes on my Social Security benefits?
If your income from all other sources plus 50% of your Social Security income, also known as Provisional Income, is greater than $25,000 (individual) or $32,000 (joint), then you will need to pay some taxes on your Social Security benefits. (For a full definition of how Provisional Income is calculated, see Investopedia.com).
And some cool facts about Social Security
- The most popular age to start Social Security is 62 (41% of men and 46% of women in 2014) but that is gradually changing. More people are waiting until 66 now than in the past.1
- The first Social Security recipient – Ida May Fuller. She paid into the system for 3 years, a total of $24.75. When she died at 101 years of age, she had received $22,888.92 in benefits.
1 http://www.nytimes.com/2014/05/15/business/retirementspecial/social-security-at-62-lets-run-the-numbers.html?_r=0