By Nicole M Albrecht
When it comes to Social Security, we often hear the same questions. Should I apply now to get earlier payments? Or wait for a few years to get larger checks?
We don’t know how long we will live. So, we all have to use the information that is available to us. This is where we can help.
You may be aware that if you take Social Security before your full retirement age (FRA), your benefits will be less. But the question is how much less?
As an example, if you were born in born in 1952, your FRA is 66. If you decide to take social security in 2014, at age 62, your monthly Social Security benefit will be reduced 25 percent.
If you take Social Security benefits before reaching FRA and continue to work, your benefits could again be affected. There is an earnings limit when taking social security before your FRA. If you earn more than $15,480 in 2014, the Social Security Administration (SSA) will withhold $1 benefit for every $2 of earned income over the $15,480 limit.
On the other hand, if you decide to delay taking social security and continue working, your benefit check will increase 8 percent for every year you delay taking social security past your FRA. To be precise, benefits will increase by 0.67 percent for every month worked past your FRA. So it may pay in more ways than one to stay in the workforce longer.
How does the SSA define earned income? If you work for yourself, the SSA considers your net earnings from self-employment to be your earned income. If you work for an employer, your wages equal your earned income. The SSA does not count investment earnings, interest, pensions, annuities and capital gains toward the current $15,480 earnings limit.
Learn more at our upcoming social security seminar August 21st in our office. The SSA website is packed with information and is user friendly. One last reminder: Even if you don’t sign up for Social Security at full retirement age, make sure that you sign up for Medicare at age 65.
Nicole M. Albrecht may be reached at (951) 719-1515 or Nicole@taxmanfred.com