Category Archives: social security

SOCIAL SECURITY: What’s your plan?

Understanding your Social Security benefits for retirement is often the key to survival for many of us. But, about 70% of us lock in benefits at their lowest amount when 62 years old. Many are still working at this time which creates an unnecessary conflict with your social security benefits.

The so called “full retirement” age is 66 if born from 1943 to 1954. This gradually increases to 67 if born in 1960 or later. If you take benefits before full retirement and are still working you can trigger a special penalty.

If you take benefits before full retirement(62-65), social security will deduct $1 for each $2 you earn above $15,720(for 2015). If you earn just $25,000 that year, the deduction is 1/2 of $9280 or $4640 that is withheld from your benefit check.

When you reach full retirement age, social security deducts $1 for every $3 above $41,880(for 2015)–a much higher limit. So, you could earn up to that limit without loosing any benefits at all–a much better scenario. Many of us will work part-time to keep things interesting and to supplement our incomes, so you want to set yourself up for the best outcome.

In addition to this, you must be aware of your tax obligations. You will pay taxes on your social security if you total income is more than $25,000 if single. However, if you file a joint return, you will be taxed on anything over $32,000. So, two single people living together have a higher tax threshold than those married. This has commonly been referred to as the marriage penalty and the main reason elders prefer to cohabit instead.

So, based on the above info from social security, the best outcome here is to simply wait until your are 66 or 67 years old to start and stay married or don’t remarry. Let me add that there is a second reason to not remarry. Remember, you can take half of your spouse’s social security at 62(without any loss to that spouse) and then start your full benefits at 70 when they are higher. You have to have been married at least 10 years to qualify.

In case this sounds a bit confusing at first, please see my other article that spells it out in more detail. In it, I provide 6 reasons to take social security at 62 and 6 reasons to take it a 70 years old. When I decided to start my social security at 62, it was because I fit into one of the 6 reasons provided. I certainly encourage you to spend a little time to understand this before you have to decide. The last thing you want to hear you left money on the table when you actually qualified for it. Here is the article When to Start Social Security:

L. Johnson of Creative Retirement for Women