What to Know About Collecting Social Security and How to Maximize It

Real Money Talk

Just over 1 in 5 Americans collect Social Security benefits on a monthly basis and, that number is rising every year.

Whether you or a family member are planning to receive Social Security benefits at some point in your life, it’s important to first understand more about how the program works and how you can benefit from it. Before applying for your Social Security benefits, read through these eight most common questions that people ask about the program and uncover how they apply to your financial well-being.

How Does Social Security Work?

If you’re an employed American, you’ve probably noticed the Social Security withholdings that gets taken out of your paycheck. You may be thinking — but, do I get that back?

In short, yes, but your contribution is helping fund the more than 61 million Americans who collect Social Security on a monthly basis. The federal program was established as a way to provide people with financial stability if they’re retired, are workers that have become disabled, or are part of a family in which a spouse or parent has died.

Although you might not be benefiting from Social Security currently, the program is meant to support future generations when they become eligible. Therefore, once you qualify for Social Security, whether tomorrow or in 30 years, the current working generation will help provide that income for you. It’s set up as a cycle of support for Americans who need financial stability based on their age or circumstance.

What Age Do I Start Collecting Social Security?

You can start collecting Social Security at the age of 62, but the longer you delay the benefits, the more your monthly stipend will be.

For example, if you start collecting Social Security at 62 years old, you’ll receive 75% of the monthly benefit since you’ll be receiving benefits for a longer portion of your life. The percentage that you receive will increase for every month past your 62nd birthday until you reach 66 years old, where you will receive 100% of the monthly benefit.

Learn more about the percentage of income you will collect based on your year of birth with the Social Security Administration (SSA) Benefits Planner.

Do I Need to Stop Working to Collect Social Security Benefits?

No, you are eligible to collect Social Security benefits while you’re still working as long as you meet the age requirements. However, if you’re younger than full retirement age (66 years old) and earn above a certain threshold, you will be subject to a lower monthly Social Security stipend.

If you’re younger than full retirement age during the entirety of 2018, you’ll have $1 deducted from your benefits for each $2 that you earn above $17,040. If you reach full retirement age during 2018, you’ll have $1 deducted from your benefits for each $3 you earn above $45,360 until the month that you reach full retirement age.

How Do I Apply for Social Security Benefits?

There are three different options to apply for Social Security benefits. Once you gather all of the required information, select the option that’s most convenient for you:

Apply online. Follow the guidelines and fill out the Social Security Administration (SSA) Retirement/Medicare Benefit Application.

Apply by phone. Call 1 (800) 772-1213 to begin the process. For those who are deaf or hard of hearing, you can call TTY at 1 (800) 325-0778.

Make an in-person appointment. Apply by making an appointment and visiting a local Social Security office. Use the Social Security Office Locator to find your closest location using your zip code. If you live outside of the U.S., you can contact the closest U.S. Social Security office, U.S. Embassy, or consulate.

How Much Social Security Will I Get?

The amount of Social Security benefits you will get depends on your date of birth and your earnings history. The benefits are calculated based on your 35 highest-earning years in the workforce, which are adjusted for inflation. If you don’t have 35 years of earnings to report, a $0 income is included into the average for every year less than 35 years that you didn’t work.

In 2018, the Social Security Administration reported that the average monthly benefit for retired workers was $1,404. Many Americans find that their monthly Social Security earnings aren’t enough to support their lifestyle, so they save for retirement throughout their career with a 401(k) plan, IRA, or other forms of retirement savings accounts.

To help estimate how much you will receive in benefits in today’s dollars and inflated (future) dollars, use the Social Security Quick Calculator.

What is the Maximum Social Security Benefit?

The maximum Social Security benefit you can receive is $2,788 per month, but to earn this income, you need to have the maximum taxable earnings for 35 years. That means that you’d need to be earning an income in the six figures for several years.

That said, it’s worth mentioning that even if you did receive the maximum Social Security benefit, it would still be significantly less than your six figure earnings at $44,162 per year.

How Much Social Security Do I Earn With Spousal Benefits?

Spousal benefits are available even if you have never worked under Social Security as long as you’re at least 62 years of age and your spouse is receiving retirement or disability benefits. The amount you will receive comes down to if you qualify for your own retirement benefits as well.

The Social Security Administration prioritizes your retirement benefits over your spouses, but if your spouse’s benefits are higher than your own, you’ll get a combination of benefits equaling the higher spouse benefit.

Similar to your own retirement benefits, you will receive a percentage of your spouse’s benefits until you reach full retirement age. Once you reach full retirement age, your benefit as a spouse will not exceed half of your spouse’s full retirement.

You’re also eligible for spousal benefits if you’re divorced and meet the following requirements:

  • Your previous marriage lasted 10 years or longer.
  • You’re currently unmarried.
  • You’re at least 62 years old.
  • Your ex-spouse is entitled to Social Security benefits.
  • The benefit you are entitled to receive based on your own work is less than the benefit that you would receive based on your ex-spouse’s work.

How Do I Delay My Social Security Benefits?

You can delay your Social Security benefits by not applying, but it’s important to understand the benefits and disadvantages to delaying that income.

If you’re financially stable enough to delay your Social Security earnings, you’ll end up with a higher monthly income for the rest of your life. Once you reach full retirement age, you’ll receive 100% of your Social Security benefits, but note that if you extend the delay past 70 years old, the benefit increase no longer applies. Even if you do delay your Social Security benefits, make sure to apply for medicare at the age of 65.

If you’re interested in applying for Social Security benefits, keep in mind your age, income and spousal benefits before making the final decision to apply. Remember that delaying the process could result in a higher Social Security income for every month that you wait.

Sources: SSA.GOV: Understanding the Benefits | SSA.GOV: Social Security Beneficiary Statistics | SSA.GOV: Legislative History | SSA.GOV: Benefits Planner | SSA.GOV: How Work Affects Your Benefits | SSA.GOV: Benefits Planner | SSA.GOV: quick calculator | U.S. News: How to Predict Your Social Security Payout | Forbes: What Is The Most I Can Receive From My Social Security Retirement Benefits? | SSA.GOV: Snapshot of a Month


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