As you approach retirement, it is more important than ever to understand the role that Social Security benefits can and should play in your overall retirement income plan. Being able to live the retirement life that you’ve always dreamed of is easier and more likely if you plan appropriately. PAX Financial Group is hosting a series of Social Security workshops and encourages anyone in the local area to attend. These events are free and limited to the first 30 people.
Social Security is a federal program that provides you a source of income after you stop working, based on the time you spent working and the amount of taxes taken out during your working years. Finally drawing this benefit may seem pretty straightforward, but there are several ways that you can start taking your Social Security benefits.
Here are a few things to consider:
When and How to Start Receiving Social Security Benefits
There is no one-size-fits-all answer for when you should start receiving your Social Security benefits. Everyone’s situation is different, so there are a lot of factors to take into consideration.
The current full retirement age is 66 and 2 months for anyone 62 or older in 2017. (That age is slowly increasing.) However, you can start to draw benefits before then. If you do decide to draw Social Security early, the amount you receive every month will be less than if you waited, because you’re stretching a certain amount of money over a longer period of time. But that’s not always a bad thing. You should consider your current health and life expectancy, your family’s longevity, your life and retirement priorities, whether your spouse will also receive Social Security, whether you want and/or can continue to work and what you plan to do in retirement, among other things.
You can also choose to delay the process and start to take Social Security benefits as late as 70 years old, which will increase the amount you get monthly. This increase can be substantial.
According to the Social Security Association, a worker with a $1,000 benefit at 66 and 2 months (full retirement age) would receive $750 a month if taken early at age 62. If taken later at age 70, the benefit would be $1,320 a month. The amount is higher, but will be dispersed eight years later.
Every situation is different, and every family has different plans. Married couples have two lives to prepare for, and more if there are children. How long will you be able to work? Is your spouse working too, and if so, when will he or she start receiving benefits? When do you want to retire? Everyone’s circumstances are different, and therefore, there are no right or wrong answers. But answering these questions is important. When you have a plan, preparing for retirement and Social Security benefits increases the chances that your goal will actually come to fruition.
How Social Security Benefits Work for You and Your Spouse
A spouse is eligible to receive your Social Security benefits as long as you’ve been married for at least a year or if your spouse is the parent of your child. The amount your spouse will receive also depends on when they decide to start taking the benefits and whether he or she worked as well and also qualifies for Social Security benefits.
If your spouse does qualify, he or she can receive a monthly payment of up to one-half of your benefit. This is something you should also factor when deciding the right time to retire. Benefits paid to your spouse will not decrease your benefit.
In the event of your passing, your spouse is also eligible for your Social Security benefits. When you are working, some of the taxes taken out of your paycheck go toward survivors’ insurance. Death is not a fun subject, but it is something you should bring up to your financial advisor when planning for the future.
An ex-spouse can be eligible for your Social Security benefits if you were married for at least 10 years.
As you can see, there are many things to think about before taking Social Security benefits, and talking with a financial advisor is always smart.
Opportunities to increase your benefits throughout retirement
There are several ways you can increase your Social Security once you’re retired, but again, every situation is different. We recommend sitting down with a retirement specialist to discuss your specific situation. We recommend finding an advisor who will help you prepare financially, emotionally and physically for this great time in your life. Poor planning could result in a poor retirement, unlike the one you have in your mind.
Before deciding to retire, remember to consider these factors:
- Do you have others source of income after you retire – 401k plans, pensions or savings?
- How do you plan to spend your days in retirement?
- When will your spouse retire?
- How is your health?
- Will you have health insurance?
PAX Financial Group is always here to help.
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