Skip to main content

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

 203-222-9370

 www.soundasset.com

www.soundasset.blogspot.com

Any questions?  Please contact me at nrwayne@soundasset.com

Comments

Popular posts from this blog

Sound Advice: April 7, 2021

The High Dividend Strategy: Pros and Cons Let's start with the bottom line about investing in high dividend stocks: It works, but there are significant wrinkles.  A while back, I did a 20-year study of investing in high dividend stocks.  The approach was straightforward.  I began with the S&P 500 universe and divided it into 10 groups of 50 stocks each.  The groups were arranged by dividend yield, highest to lowest, at the beginning of each of the years.   I then tracked the total returns (dividends plus capital appreciation) of these groups for the full period. The results were illuminating.   The highest total returns were from the group with the highest dividend yields.   The returns then descended in perfect order down to the group with the lowest dividend yields.   What's more, the aggregate return from the group with the highest returns was greater than that of the Standard & Poor's 500 and its volatility over the period was lower. That did not mean all

Sound Advice: April 14, 2021

Up, Down & Sideways   In past years, the warmer months brought with them a time to turn one’s thoughts to more blissful endeavors.   Although childhood may have been many years ago, what lingers is the apparent freedom from care we felt when at last we were done with school.   Much has changed since those halcyon days when time hardly seemed to move.   Back then, the days went by slowly and the important decisions were few.   Now it’s almost as if you don’t know which direction to turn first. It’s all about communications and the seeming necessity of keeping up to date with what’s going on.   Much of the rising flow of developments may have little impact, but even so it’s no longer a time when we can disconnect until September. From an investment perspective, the challenge is to sort through the rapidly growing mountain of information to isolate the data that is critical and take action where it is needed.   On a grand scale, it’s a matter of separating the wheat from the cha

Sound Advice: April 21, 2021

How is the Market Doing? Despite all the noise being trumpeted by the media, the daily prattle about market moves is often wide of the mark and overloaded with information that is misleading or just plain inaccurate.   How else to explain a jump of several hundred points one day followed by a plunge the next day?   That makes no sense. Over time, the foundation for stock valuations is underlying profitability of the companies involved.   As profits increase, stock prices rise, though not necessarily in perfect reflection.   The relationship tends to be meaningful over extended periods, but often not in shorter spans of time.   That’s all about changes in investor psychology.   So let’s begin by defining the “market”.   If we are referring to stocks, the most common reference is to the Dow Jones Industrial Average, which consists of 30 major companies whose progress might be considered representative of the U.S. economy as a whole. The majority of the companies included here are r