Don’t Make This Social Security Mistake

By: Garrett Shinn, CPA

Are you quickly approaching retirement and worried about your inadequate savings?

If so, you are not alone. Increasingly, Americans are saving far less for retirement and are instead relying more on social security benefits. If social security will comprise the majority of your retirement income, you need to carefully strategize when to start claiming your benefits.

Although you can first claim your benefits at age 62, this is probably not your best option, since the Social Security Administration (SSA) will pay you only $75 for every $100 that you would have received if you had waited until the full retirement age (FRA) of 66.

This reduced payout may also affect your family members if they are eligible for survivor benefits. The amount that your survivors will receive is based on the amount of your benefit at the time of your death. As a result, waiting longer to claim a larger benefit for yourself will yield a larger benefit for your family members as well.

You may also be penalized if you keep working while receiving your benefits. If you are under the age of 66 and earn more than $15,720 each year, you will lose an additional $1 in benefits for every $2 in income above the threshold. Furthermore, by waiting to claim your benefits, you can actually receive above 100% of your benefit. For each year that you wait, your benefit will increase by roughly 8%.

Despite the benefits of waiting, there are certain situations in which claiming your benefits early may be advantageous. For example, if you don’t expect to live long, if you already have substantial retirement savings, or if your spouse earns significantly more than you, you may actually benefit from claiming your benefits early.

Despite the benefits of waiting, there are certain situations in which claiming your benefits early may be advantageous. For example, if you don’t expect to live long, if you already have substantial retirement savings, or if your spouse earns significantly more than you, you may actually benefit from claiming your benefits early.

If you have any questions, please contact the Shinn & Co team at info@shinnandco.com or call 941.747.0500.