Securing Your Retirement
Transforming Social Security into a Winning Retirement Strategy
Medical advances and healthier lifestyles have increase longevity. However, more than 67% of people collect their Social Security benefits early. This means that they are collecting a reduced amount because they decided to collect benefits before their Full Retirement Age. Why, in the face of longevity, do many people collect benefits when they hit age 62? Probably because they can. Even though so many people are worried about longevity, they are willing to accept reduced benefits for life. You have the option to start collecting benefits anytime between age 62 and age 70. However, if you collect before Full Retirement Age, you will collect reduced benefits. If you wait until Full Retirement Age, you will be eligible for full benefits (also known as the primary insurance amount). If you wait until after full retirement, you will be eligible for an increased benefit.
Guaranteed Increases for Collecting Late
If you wait to collect Social Security benefits, there are guaranteed increases. For instance, if you collect at FRA, you will receive 100% of the FRA benefit. If you wait one year, you will receive 108% of the FRA benefit. If you wait two years, you will receive 116%. If you wait three years, you will receive 124%. If you wait four years, you will receive 132%.
Taxation of Social Security Benefits
You may have to pay taxes on your Social Security retirement benefits. If your provisional income (1/2 of your Social Security benefits and your Modified Adjusted Gross Income) is below $25,000 and you are single or $32,000 and you are married, your benefits are tax-free. If it is above these amounts but below $34,000 and you are single or $44,000 and you are married, your benefits could be taxable anywhere between 0-50%. If it is above $34,000 and you are single or $44,000 and you are married, your benefits could be taxable anywhere between 7-85%.
Next Steps for Social Security
1. Download your statement at www.ssa.gov.
2. Meet with your financial professional to review a personalized analysis.
3. Incorporate collection into your retirement plan.
How to File for Social Security Benefits
1. Online: Preferred method. Go to www.ssa.gov. Click on "benefits" than "retirement" then "apply for retirement benefits".
2. In Person: Call Social Security at 1-800-772-1213 and schedule an appointment for an in-office interview to file for benefits.
3. Via Phone: Call Social Security at 1-800-772-1213 and schedule an appointment for a telephone interview to file for benefits.
Click on the link below to check out BlackRock's presentation on "Securing Your Retirement".