King & Wood, P.A.

Good News about Social Security

“For a long time, the Social Security Trustees have been warning that the retirement benefits system is facing some future financial hardships.”

The simplest explanation is that Social Security is paying out more than is being collected and going into the trust funds to make up the difference. If this were to continue, the trust funds would be exhausted at some point, and the only money for benefits would be revenue being collected at the present time. However, there is no need to worry, says this article “Social Security Retirees Just Got Some Good news About Future Benefit Cuts” from yahoo! finance.

While future cuts are a possibility, there’s also good news, according to the 2024 Social Security Trustees Report. The Old-Age and Survivors Insurance (OASI) Fund will be able to continue to pay full benefits until 2033. If nothing changes, there must be a 21% benefit cut. The Disability Insurance (DI) Trust Fund is anticipated to be able to pay benefits until at least 2098.

What would happen if the OASI Fund were emptied? A few things could happen. A law change could combine the OASI and DI funds. Because this is a real possibility, the trustees share data on when the combined funds might be emptied.

In 2023, the Trustees Report said the combined funds would pay full benefits until 2034, but this year’s report shows there’s enough money to pay full benefits until 2035. It also notes that if any cuts were to go into effect, the money coming into Social Security from the combined funds would be able to pay 83% of promised benefits, up from 80% in 2023.

These may sound like small improvements but indicate a trend in the right direction. Much of this is due to stronger-than-expected economic growth, which has led to improved labor productivity and lower projections for long-term disability insurance benefits. Taken together, Social Security’s long-term stability is looking good.

The additional year means any benefit cuts will be smaller than previously anticipated. If needed, Congress could also act to fund the trust funds. There’s still reason to worry about what might happen in 2035, since many seniors count on Social Security to fund most of their retirement.

Lawmakers will unlikely allow this program to be defunded, since seniors continue to be a major voting bloc. Similar situations occurred in the early 1980s, and Congress passed amendments to protect the program.

The new issue? Those amendments from forty years ago included a change to Full Retirement Age, when a person may collect an unreduced benefit. They also imposed a tax on some benefits for high-wage earners. As a result, there may be changes in the future.

Overall, though, the news is good. Hopefully, the good economic news will keep coming to protect Social Security, giving lawmakers more time to figure out ways to fund this vital program.

Reference: yahoo! finance (May 16, 2024) “Social Security Retirees Just Got Some Good news About Future Benefit Cuts”

Social Security has a Little Known “Do-Over” Clause

“In order to maximize your Social Security benefit, you first need to understand the four elements that factor into your payout. A little-known Social Security clause can be a silver lining for select baby boomers who regret claiming benefits early.”

Most seniors rely on Social Security benefits to make ends meet in retirement, says a recent article from The Motley Fool, “The Little-Known Social Security Do-Over Clause That’s a Must-Know for Baby Boomers.” While this under-the-radar item can help create a considerably larger Social Security payout, it comes with two catches and is unavailable for everyone.

Getting the most out of Social Security requires understanding how you are paid and the ins and outs of your own claiming decision.

Several factors impact how much of your Social Security benefit you get to keep. If you file early, you may be subject to the retirement earnings test. If you earn above a preset income threshold, you may have benefits taxed at the federal and/or state level. However, when you break Social Security down to the basics, four parts determine your benefits.

The first two are work history and earnings history. The Social Security Administration considers the 35 highest-earning, inflation-adjusted years when determining the monthly benefit. Workers must earn income for 35 years to avoid having a $0 averaged in by the SSA for each year less than 35.

The third factor is the full retirement age (FRA). This is when you become eligible for the 100% payout, determined by your birth year. Based on the retirement age charge, boomers' FRAs range between 66 and 67.

The fourth factor is your claiming age. For every year you wait to take benefits, your monthly payout rises by 8%, starting at age 62 and continuing through age 69. Taking benefits before your FRA means a permanent reduction of up to 40%, depending upon your birth year. However, if you can wait until after your FRA, you could increase your Social Security benefit by anywhere from 24% to 32%.

Social Security’s Annual Statistical Supplement shows that most retirees take benefits before full retirement age. As of 2021, 65% of the 47.29 million retirees took a permanently reduced monthly payout.

This is the optimal choice for many, meaning the selection generates the highest lifetime income from Social Security. For example, someone with chronic illnesses that shorten their life expectancy may benefit from claiming early. A lifetime low-income spouse could take their payout early to allow their higher-earning partners’ benefits to grow over time. This is a good way to generate household income while larger future benefits grow.

Historically, early claims don’t work out so well. A study released in 2019 found that just 8% of claimants at ages 62, 63, and 64 made an optimal choice. However, there’s a silver lining for some boomers and future retirees who may regret their early claiming decision, even though it comes with two catches.

The “do-over” clause is Form SSA-521, officially known as “Request for Withdrawal of Application.” This is a request to SSA to withdraw your benefits claim. If approved, the early claim is undone, and your benefits go back to accruing up to 8% annually through age 69. This is especially helpful for workers with little or nothing saved for retirement who took a reduced payout but ended up back in the workforce not long after. Boomers landing high-paying jobs may file SSA-521 and forgo their payout in favor of a higher Social Security payout a few years later.

However, there are two important restrictions. One, requests to cancel or withdraw the application can only be made up to 12 months after you start getting benefits. You can't use this form if you’ve been receiving benefits for 18 months. You can also only cancel your benefits application once.

Secondly, you have to pay back every penny in benefits you received in the 12 months leading up to filing Form SSA-521. This includes any benefits spouses or children may have received based on your earnings history.

While this little-known clause has limitations, it may offer select baby boomers a chance to start over if they took Social Security too early. It’s not for everyone, but it’s a must—know for all.

Reference: The Motley Fool (Aug. 27, 2023) “The Little-Known Social Security Do-Over Clause That’s a Must-Know for Baby Boomers”

When Should You Start Taking Social Security Benefits?

“Should you retire now and begin collecting your benefits, or hold off for a few more years?”

You don’t need to wait until age 67 to start collecting Social Security benefits, even though the Full Retirement Age is currently 67. You could, if needed, start collecting benefits as early as age 62, although there are some downsides to such an early start, according to a recent article from CNET, “When Is the Best Time to Begin Collecting Social Security Benefits?”

When you start collecting Social Security could impact your finances for the rest of your life. While the big Cost of Living Adjustment (COLA) in 2023 added more cash to every benefit, you might want to know if this is a reason to start collecting benefits this year.

There are pros and cons, and the best solution requires an honest and thorough look at your own financial situation, including other sources of retirement income.

First, how are benefits calculated? The Social Security Administration uses your average monthly earnings from up to 35 years to calculate your “primary insurance amount” or the benefit you’d receive at FRA (Full Retirement Age). This includes income up to the “taxable maximum” amount, which is $160,200 for 2023.

After determining the number of years, the years with the highest earnings are chosen, taking inflation into account. The sum of those earnings, divided by the total number of months worked during those years leads to a final resulting average, rounded down to the next lower dollar amount.

Your earnings are then indexed, so future benefits are reflected in the current standard of living to help offset inflation. This “average indexed monthly earnings” number is then used to calculate your monthly benefit.

If you are a spouse or an ex-spouse of someone who has contributed to Social Security through taxes, you might be able to claim part of their benefits, either receiving the spousal share of their benefit or a payout based on your own work history, whichever amount is greater.

The earliest you can start taking benefits is age 62, although you’ll receive a smaller amount than if you wait until FRA. Every situation is different, so there’s no single “best age” for everyone. The questions to ask are these: when do you want to retire, and when can you afford to retire?

When you can afford to retire depends on more than the savings you have accumulated. It also depends upon the lifestyle you want and where you’ll live during retirement. You’ll also want to consider your health and longevity. If you are living with a chronic illness, you may choose to retire earlier and collect earlier. It’s a very individual decision.

If Social Security is the sole or majority income source to pay expenses during retirement, waiting to retire and claiming benefits at a later date is likely your best choice. You’ll receive more money each month and have more time to save for retirement.

If you choose to retire early, benefits will be reduced for each month before FRA. If you were, for example, born in 1960 or later and retire at age 62 with a retirement benefit of $1,000, your monthly payment will be reduced to $700—a 30% reduction.

On the other hand, that’s $700 you would otherwise not receive if you weren’t taking Social Security benefits. Therefore, you might benefit from collecting smaller payments over a longer period of time.

Retirees need to monitor their spending and withdrawal rates, so they don’t outlive assets. Reducing spending and forgoing costly expenses like travel, especially when markets are down or inflation is high, can help extend retirement savings.

Reference: CNET (Feb. 25, 2023) “When Is the Best Time to Begin Collecting Social Security Benefits?”

What Is Social Security Increase in 2023?

“The government has announced a change that may help ease the pain for those who depend on Social Security, along with two others that will affect those who are still working.”

Three big changes are coming to Social Security in 2023, and they may factor in your financial plan for the coming year. A recent article from The Motley Fool, “3 Changes to Social Security in 2023 You Probably Didn’t Know,” says checks are going to look a lot different in 2023.

Record inflation levels have made everything from gas to groceries more expensive and a serious challenge for seniors dependent upon Social Security. However, change is coming soon.

The Cost-of-Living Adjustment (COLA) for 2023 is going to be a whopping 8.7%. This adjustment happens every year, but this is one of the biggest increases in many years. In December, the Social Security Administration started sending notices to all beneficiaries listing their new monthly benefit. The new number can also be seen on the My Social Security website.

There’s also been a change to the amount you can earn and have to pay in Social Security payroll taxes. In 2022, only the first $147,000 was subject to Social Security payroll taxes. This will increase to $160,000 in 2023. If your goal is to achieve the maximum Social Security benefit upon retirement, you’ll need to both earn more and pay more taxes on at least this much.

This really only impacts high income earners. Most people who earn less than $147,000 are already paying Social Security taxes on their income. Only high-income earners will have to pay extra next year.

The third big change is to thresholds for the earnings test. The Social Security earnings test withholds money from Social Security benefits if the taxpayer is receiving benefits and earns too much before they’ve reached their full retirement age (FRA). Depending on the year of birth, this could include people between 66-67.

In 2023, you lose $1 from each check for every $2 earned over $19,560 if you’re under your FRA for the entire year. You also lose $1 for every $3 you earn over $51,960 in the year you reach FRA if you earn this much before your birthday.

These thresholds will increase in 2023, from $19,560 to $21,240 and from $51,960 to $56,520.

The money lost to the earnings test doesn’t evaporate. When the taxpayer reaches their FRA, benefits are recalculated, and future checks are larger to make up for any lost amounts.

Your buying power won’t change that much. However, the increases are hoped to relieve some of the financial pain of inflation. Budgets will still be tight for those who don’t have other sources of income. A part-time job might be needed to provide additional income. If they exist, retirement accounts will need to be tapped.

Reference: The Motley Fool (Dec. 3, 2022) “3 Changes to Social Security in 2023 You Probably Didn’t Know”’

How to Maximize Lifetime Social Security Benefits

“As retirement nears, you may be wondering when to start taking Social Security payments. These benefits are primarily based on your earnings during your working years and your age when you start receiving benefits.”

Unless you know your date of death, it’s challenging to know when to start taking Social Security benefits to maximize lifetime payments. But, as explained in an article titled “How to Calculate Your Social Security Break-Even Age” from U.S. News & World Report, you can get close.

Age 62 is when people can start taking payments, but they will be reduced compared to those taken at full retirement age. To achieve the maximum monthly benefit, wait to take benefits at age 70. The total monthly benefit will be higher if you start collecting at a later age, but it will take a while to receive the same amount if you start taking benefits earlier. The “break-even” point comes when the payments later in life begin to exceed the value of taking payments earlier.

A number of factors are at play:

• Your personal and family health history
• Your spouse’s age and benefits level
• Other income streams

Here’s one example. If your full retirement age (FRA) is 67 and your benefits will be $2,000 per month, but you decide to collect at age 62, your monthly benefit is reduced by up to 30%. You’ll receive $600 less if you start payments at age 62, and your monthly benefit will be reduced to $1,400. If you can wait until your Full Retirement Age, the monthly benefit will be $2,000. Every additional year after age 67 you don’t take benefits, your monthly benefit increases by 8%. This would give you a monthly benefit of $2,480 per month at age 70.

Taking the wider view, claiming at age 62 means a total of around $470,000 in benefits if you live to 90 (not including any COLAs, or Cost Of Living Adjustments). Claiming at Full Retirement Age would net about $595,000 by age 90. If you started claiming benefits at age 62, you’d have to reach age 80 to break even with what you would have received if you’d waited until Full Retirement Age (FRA).

But there are other things to take into consideration. Since none of us knows when we are going to die, deciding when to start taking Social Security benefits should look at other considerations. One is your life expectancy. In some families, living into the late 90s is common, while others rarely make it past 70. If you have a chronic medical condition like diabetes, a heart condition or cancer, you may want to start taking benefits earlier.

Another element is your spouse’s medical status and benefits. If the main breadwinner takes benefits early, the surviving spouse’s benefits will be reduced. When one spouse dies, the surviving spouse will receive the higher of the two benefits.

Whether you are still working is another factor to consider. Earning more than $19,560 while collecting Social Security means any benefits will be reduced. If you earn more than $19,560 in 2022 and are collecting benefits before your FRA, your benefit will be temporarily reduced by $1 for every $2 earned above the limit. When you reach FRA, then you can earn an unlimited amount with no reduction in Social Security benefits.

If there are other income streams for the household, it may make sense to use those accounts for income and hold off on Social Security. But if funds are tight and you don’t expect to live a long life, it may make more sense to file for benefits earlier, rather than later.

Reference: U.S. News & World Report (Aug. 26, 2022) “How to Calculate Your Social Security Break-Even Age”

Do You Lose Benefits If You Retire Early?

“Claiming Social Security before full retirement age (FRA) has consequences–namely, that you'll get stuck with a lower monthly benefit for life.”

Not everyone retires because they want to. A lost job, serious illness or large life change could put you into an early, unwanted, retirement. A recent article from USA Today titled “Forced to retire early? 3 things you can do to put off filing for Social Security” explores the options.

The first thing most people think of is taking Social Security benefits before Full Retirement Age (FRA), which has long-term consequences. The idea seems logical: by taking benefits, you’ll protect your retirement nest egg. However, you’ll receive a lower monthly benefit for life. Instead, consider a few alternatives.

Pursue a part-time job. If finding a full-time job doesn’t work, or if you aren’t physically or mentally able to work full time, a lower-stress part time job could fill in the financial gaps. Employers are eager to find qualified workers, in all kinds of workplaces. You might score a remote part-time job, which would be ideal if mobility is an issue. You may prefer a position where you interact with the public, like the greeter at big box stores. If you’re savvy enough to score a high paycheck, you might be able to get by on a different income level, while letting Social Security benefits grow.

Revise your spending significantly. Take a look at your cashflow. If you’re in a hot housing market, can you sell your current home and move into smaller quarters? Does your family still need two (or three) cars? If you’re among the average Americans who dine out at restaurants several times a week, a return to eating at home could help your budgeting. How many streaming services are you paying for every week?

In some instances, you can’t cut spending, especially for medical care. However, chances are there are some cuts you can make to help trim spending and reduce the withdrawals from retirement accounts, including IRAs, SEPs or 401(k)s.

Can your home create income? Monetizing your home can take a few different forms. Today’s reverse mortgages are not the same as they were thirty years ago. Depending on how much equity you have in your home, you might find the monthly checks help avoid having to take Social Security early.

Could you take in a roommate to help with monthly bills? Obviously, this step requires a lot of thought. However, if an additional $500 would tide you over, it might be a viable option—and you may enjoy the company. There are non-profit organizations that pair seniors with roommates. There are also online apps for people to rent out their fenced backyards by the hour to dog owners who need a safe place to play with their pets.

Knowing there are options can make financial stress a little less overwhelming. Do your homework and find what works for your situation.

Reference: USA Today (June 26, 2022) “Forced to retire early? 3 things you can do to put off filing for Social Security”

When a Spouse Dies, Does Survivor Get Their Social Security Benefits?

“When you’re gone, your spouse’s income will take a major hit–one that can be worsened significantly, if you make the wrong decision about when to claim.”

Most people don’t understand how Social Security works for themselves or their loved ones. Here’s one major misconception: you can’t file early for Social Security and then get an increased level of benefits once you’ve reached Full Retirement Age, or FRA. This is one of many common errors, according to a recent article “When You Claim Social Security Can Have Huge Implications for Your Spouse” from Kiplinger. Once you’ve started taking benefits before your FRA, your lower level is set for life.

Another common error happens when married couples don’t understand how their benefits impact each other. If your spouse depends on your Social Security benefits to pay the bills, you both need to gain an accurate understanding of how surviving spouse benefits work.

Let’s that say a couple retires and both decide to take their Social Security benefits right away. One is 66 and the other is 62. The older, Pat, receives $3,000 monthly. The younger spouse, Penny, will receive $1,900. Their total household benefit from Social Security is $4,900. If Pat dies first, Penny will lose her own benefit and receive only Pat’s $3,000 monthly benefit. If this is the only income, Penny may face some serious financial challenges.

If Pat started taking benefits earlier than his FRA, at 64 instead of 66, his monthly benefit would be $2,625. If he were to start taking benefits at 62, his Social Security benefit will be even smaller. The reductions are permanent, and they also impact a surviving spouse’s monthly benefit.

What can you do to maximize your spouse’s survivor benefit? Wait for as long as you can to claim your Social Security benefits. For every year you wait, you earn an extra 8% in delayed benefits. These increases grow until age 70, at which point your Social Security benefit reaches the maximum.

Not everyone can afford to delay their benefits. However, when possible, it makes a big difference to the surviving spouse, who is statistically likely to be the female spouse. For couples who can afford to delay benefits, couples with significant age differences and couples where one of the two has exceptionally good health or comes from a family with longevity, this is a worthwhile approach.

Delaying benefits means the loss of benefits during the years until age 70. Forgoing several thousand dollars a month may not be possible for everyone.

If your surviving spouse won’t be able to make ends meet without both Social Security benefits, there needs to be a plan to somehow bridge the gap. How this is done depends upon the individuals and their families. Every situation is different. It is not an easy situation to address. However, one thing is certain: ignoring it will not make the problem go away.

Reference: Kiplinger (April 20, 2022) “When You Claim Social Security Can Have Huge Implications for Your Spouse”

Why Is Social Security Important?

“Even for the wealthy, their lifetime Social Security benefits likely rank high among their largest assets. For people with average lifetime incomes, it is often the biggest.”

Knowing the ins and outs of various Social Security strategies is important to make the most of the program for you as an individual and for your family. Questions about making the right financial moves and investing are usually not followed by questions about Social Security. However, they should be. A recent article from CNBC titled “Social Security may be a ‘treasure trove’ for you and your family. But first you have to navigate some complex rules” explains how Social Security includes thirteen different kinds of benefits.

The list of different payments includes disability benefits, spousal benefits, divorced spousal benefits, child-in-care spousal benefits, widow/widower benefits, child benefits, disabled child benefits, mother/father benefits, divorced widow/widower benefits, parent benefits, grandchild benefits and death benefits.

Each type of benefit has its own requirements. The one catch: Social Security is a “use it or lose it” system. If you do not know you are eligible for a benefit, you might miss it.

One basic fact: you can wait until age 70 to get the maximum benefit. However, there is no advantage to delaying taking Social Security benefits past age 70. Eligibility begins at age 62, and for each year you collect benefits before your Full Retirement Age (FRA), you lose about 7%. FRA is based on your date of birth. Therefore, if you can wait to collect at your FRA, you will get 100% of your benefits. For every year past FRA, benefits increase by about 8%.

If you can wait from age 62 to 70, your benefits will be about 76% higher. Most people do not wait because they need the income or have serious health conditions and do not expect to live long enough to benefit from the increase.

For some families, maximizing the benefits is less about the wage earner and more about the family. If the wage earner has a disabled child, claiming benefits could trigger the child-in-care spousal benefit and a disabled child benefit. In this case, it may be better to take benefits earlier to help the entire family.

Another advantage of waiting until age 70 is it will result in a higher surviving spouse benefit, enabling a widow or widower to receive the full amount of their spouse’s monthly benefit plus their own benefits, if the surviving spouse has their own earnings.

Ex-spouses who were married for at least ten years and did not remarry until they reached age 60 are eligible for survivor benefits. You may not want to wait until FRA or age 70 on their behalf, but circumstances vary, so you should at least be aware of this.

The survivor benefit for young children or disabled children of any age, if they were disabled before age 22, does not change regardless of when you claim.

The complexity of all of these programs makes it sometimes difficult to know what the best claiming strategy is. Most people focus on the individual or couple, but not the entire family’s benefits.

Social Security experts advise wage earners to speak with more than one employee to get answers, since you may get different answers. Do your research and be your own advocate to ensure that you and your family receive the correct benefits.

Reference: CNBC (Feb. 7, 2022) “Social Security may be a ‘treasure trove’ for you and your family. But first you have to navigate some complex rules”

Should I Delay Claiming Social Security?

“When you begin claiming affects how much money you get from the program, and once you're receiving checks, it's difficult to undo your decision.”

Getting the timing right on Social Security is important. Deciding when to claim is a decision requiring thoughtful planning and accurate information. A recent article from York News-Times titled “3 Reasons to Put Off Social Security for Another Year and 2 Reasons Not to” takes a common-sense approach.

There are good reasons to delay taking Social Security benefits. First, if you are under 70, the longer you delay benefits, the larger your checks. Benefits grow anywhere from 5/12^th of a month to 2/3^rd of 1% per month, depending upon your Full Retirement Age (FRA) and your current age. FRA is the age when you qualify for a standard benefit, based on your work history. For most of today’s wage earners, this is sometime between age 66 and 67.

A second reason to delay: you may get a larger lifetime benefit, if you live into your mid-80s or beyond. However, those who need the income to pay bills may not have a choice, even if they have not reached their FRA. If possible, delaying by a few months might be helpful to increase benefits.

A third reason is if you are still working. If you are working and earning a decent salary and have not yet reached your FRA, you may run into problems with the Social Security Earnings Test. The federal government deducts $1 from each monthly benefit for every $2 you earn over $19,560 in 2022, if you will be younger than your FRA for the entire year. If you will reach your FRA in 2022, you will still have a deduction, but this will be $1 for every $3 you earn over $51,960. If you are still working, delaying taking benefits makes sense.

The good news: the money will not be out of your pocket forever. Once you reach FRA, your benefits are recalculated to include the amount previously withheld, making checks larger. However if you do not need benefits right away, the best decision is to delay taking Social Security until you retire.

There are also reasons why delaying taking Social Security benefits is not necessary. The biggest one is if you are 70 or older. The benefits stop growing on your 70^th birthday, so there is no reason to delay. Make sure to sign up for benefits by your 70^th birthday.

If your life expectancy is not great, then there is no incentive to waiting. If you pass away before signing up for benefits, you might not get any money from Social Security. Take an honest look at your own health and your family’s health history. If you think you might not live all that long, or if everyone in the family passes early, it may make sense to apply for Social Security, even before your FRA.

When you sign up for benefits matters a lot. The Social Security Administration has calculators on its website to use once you have created a my Social Security account. This will give you an idea of how much you can expect to receive in Social Security benefits at various ages, based on your own work history.

It also makes sense to align your estate plan and retirement plans with Social Security.

Reference: York News-Times (Jan. 27, 2022) “3 Reasons to Put Off Social Security for Another Year and 2 Reasons Not to,”

What Should I Know Before Starting Social Security?

“Since you began working, Social Security has recorded your reported earnings under your name and Social Security number. Social Security updates your record each time your employer (or you, if you're self-employed) report your earnings. Your earnings determine your benefit amount.”

It’s not necessary to become an expert on Social Security before starting to take benefits. However, having a good understanding of how things work could make a difference in your household income, explains a recent article from USA Today titled “Explaining Social Security: TLDR edition: The 8 things you should learn about your benefits.” Simply put, if your earnings are wrong, you may get less money than you’re entitled to.

Start by checking your earnings records. In the past, Americans received a yearly paper statement of records and benefits. Today, you’ll need to create a “my Social Security” account to review your earnings and benefits information. It’s easy enough to do, so don’t delay.

There’s no time limit on correcting earnings errors. The information can be found in earnings records, which can be seen in tax returns or W-2 forms. The exception to this is self-employed earners, and their limit is tight. They have exactly three years, three months and 15 days to correct any earnings reports.

Routinely checking benefit amounts is smart for planning household cash flow in retirement. Today’s statements provide estimates of monthly benefits every year from age 62 to 70, including full retirement age.

A critical data point for Social Security benefits: your full retirement age, or FRA. This is the age when you can receive your full benefit retirement amount, determined by the year you were born. All of this information is all on the Social Security website.

You don’t have to wait to reach FRA to start collecting benefits. You can file for benefits anytime between age 62 and 70, but if you decide to start taking benefits before FRA, the monthly amount is reduced permanently. On the other hand, if you delay benefits until after FRA, you are eligible for delayed retirement credits and may see an increase in your monthly benefit. The choice is yours, but it’s better to make an informed decision that best suits your needs.

Social Security benefits were never intended as a sole source of retirement income. The goal is to replace about half of a low earner’s pre-retirement salary, about 40% of an average earner’s pre-retirement salary and about a third of a high earner’s pre-retirement salary.

Benefits are calculated on the monthly average of the top 35 highest earning years. It’s really that simple. If you haven’t worked for 35 years, zeros are used for those non-working years, which lowers the monthly average and by extension, the monthly benefit.

There is an option to start collecting before FRA called the voluntary payment suspension. If you’ve started taking benefits before FRA, you can voluntarily request to suspend retirement benefits at your FRA and wait to receive benefits at a higher amount. This request can be made as many times as you wish between FRA and age 70. Be aware that if you suspend your own benefit, anyone who receives a benefit on your work record will have their benefits suspended as well, except for divorced spouses.

If spouses have different income levels, it often makes sense for the higher earner to wait to collect until age 70. However, if the higher earner dies after starting benefits at age 70, the surviving spouse will receive the deceased’s age 70 benefit.

Reference: USA Today (Nov. 5, 2021) “Explaining Social Security: TLDR edition: The 8 things you should learn about your benefits”