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Sound Advice: September 22, 2021

Four Things You Need To Know About Social Security 

When to Start?

One of the most common questions about Social Security is when to start receiving benefits.  The earliest age to begin is 62, although there are significant trade-offs when doing so.  First, your benefits will be permanently reduced by 25.8% from those payable at Full Retirement Age (FRA) over the course of your lifetime. 

Second, your benefits will be reduced if you earn more than $18,960 a year.  The reduction will be $1 for every $2 you earn over that limit.  The limit rises every year, but by a modest amount.  For those considering part-time work during retirement, this may not be a problem, but for folks planning to continue full-time employment, this reduction could wipe out the benefits they would receive.

For those who wait until FRA, there is no limit on earned income and no penalty.  Full retirement age is now 66 years and two months.  It increases by two months every year.

To get the highest possible Social Security benefits, wait until age 70 before getting started.  By doing so, your benefits will increase at an annual rate of 8%.  At age 70, your benefits will be 132% above the rate that would be paid at FRA.

You can start your benefits at any time between FRA and age 70.  The increase will be proportionate to the number of months waited beyond FRA.  For example, if you waited 12 months past FRA, you will receive 8% more than you would have received if you started a year earlier.

Adjustments to Social Security

Periodically, there will be modest cost-of-living adjustments to your benefits.  But there is also likely to be a significant deduction if you are signed up for Medicare Part B, which covers medical services, exams, lab tests, and the like.  The current monthly premium for Part B is $148.50 if your income is $88,000 or less.  For higher earners the premium can be as much as $504.90.

Taxes on Social Security Benefits

If filing as an individual, there are no taxes on Social Security benefits if your annual income is under $25,000.  If you earn between $25,000 and $34,000, half of your benefits will be taxable.  If you earn more than $34,000, up to 85% of your benefits will be taxable.

Spousal Benefits

Even if your spouse never worked under Social Security, he or she may be eligible for benefits if he/she is at least 62 and you are receiving retirement or disability benefits.  The benefits receivable could be as much as half of those you are receiving.  Spousal benefits would be of interest if they would be higher than those the spouse would be entitled to as a result of his/her own Social Security contributions.  Benefits paid to a spouse do not decrease the benefit you will receive.

N. Russell Wayne, CFP®

Sound Asset Management Inc.

Weston, CT  06883


Any questions?  Please contact me at


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