5 Key Things You Need to Know About Social SecurityRetirement Planning Social Security
Today we discuss 5 key things you need to know about Social Security when planning for retirement.
- Your normal retirement age
- How your benefit is calculated
- The impact of inflation
- Spousal and Survivor Benefits
- How Social Security Benefits are taxed
Watch Now: 5 Key Things You Need to Know About Social Security
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Normal Retirement Age
This is the age you will receive full retirement benefits. It is based on the year you were born. Retiring prior to your normal retirement age means your benefits will be reduced. Delaying your Social Security benefits beyond your normal retirement age results in your benefits being increased.
Calculating Your Benefit
Your benefit is based on your average indexed monthly earnings. This means Social Security adjusts your earnings in previous years for inflation. Then they take your highest 35 years of earnings to determine your primary insurance amount.
This is computed using three “bend points.” Once your average indexed monthly earnings are determined, your benefit will be 90% of the first $1,024. Then you will receive 32% of the amount between $1,024 and $6,172 and 15% of the amount over$6,172 up to the maximum.
Lower earning spouses will qualify for a total Social Security benefit that is half of the higher earning spouses benefit at full retirement age. The lower earning spouse receives their own benefit plus a spousal benefit adjustment.
Taxation of Social Security Benefits
Your Social Security benefits could be taxed if you receive enough income from other sources. Perhaps you receive a pension, investment income, distributions from IRA’s or even earnings. This will all determine how much of your Social Security benefits will be taxed.
Appearing in this Video...
|Nikki Lude, CFP®
Nikki is a Certified Financial Planner™ in Woodsfield, Ohio. She has been helping clients plan for retirement and manage wealth for over 15 years.
|Tyler Szafran, CRPC®
Tyler is a financial consultant in Wheeling West Virginia. He joined the Commonwealth Financial Services team in 2021. He works with clients to help them with their financial planning needs.
|Neal Watson, CFP®
Julie is a financial consultant in our St. Clairsville office. She has been helping clients plan for retirement, build wealth, and plan for a strong financial future for more than 15 years
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