When it comes to Social Security, many people often get swept up in the excitement of finally reaching the point where they can start collecting benefits. However, it’s essential to slow down and make informed decisions. Before you begin collecting social security, you should be asking some essential questions. Here are the top five questions to consider:
1. When should I start collecting Social Security?
The age at which you start collecting Social Security greatly affects the amount of your monthly benefit. You can start as early as age 62, but if you start before your full retirement age (FRA), your benefits will be reduced. If you can afford to wait until you’re 70, your benefits will be higher. So, it’s essential to determine what makes the most sense for your individual financial situation and health status.
2.What is my full retirement age (FRA)?
Your FRA, also known as “full retirement age,” is the age at which you’re eligible to receive your full Social Security benefits. This age varies depending on when you were born. If you claim Social Security before reaching your FRA, your benefits will be reduced—a reason why knowing your FRA is critical.
3. How will my other retirement income sources affect my Social Security benefits?
If you have other sources of retirement income, like a 401(k) or a pension, they could potentially impact your Social Security benefits. For example, if your combined income exceeds a certain threshold, up to 85% of your Social Security benefits may be taxable. Being aware of this can help you strategize and potentially minimize tax implications.
4. What will be the impact of working while collecting Social Security?
Working while collecting Social Security can affect your benefits, especially if you haven’t reached your FRA. If you earn more than a certain amount, your Social Security benefits may be temporarily reduced. However, once you reach your FRA, there’s no limit on how much you can earn without reducing your benefits. This question is crucial for those considering part-time or full-time work during their retirement years.
5. How will my Social Security benefits affect my spouse?
Your decision to start collecting Social Security can impact your spouse’s benefits. Depending on their age and your benefit amount, your spouse may be eligible to receive benefits based on your earnings record. It’s crucial to understand these implications to make the best decision for your family.
Asking these questions before collecting Social Security will guide you in making an informed and beneficial decision. The timing and strategy of claiming your Social Security benefits can have long-lasting implications on your financial health during retirement.
If you want to learn more about the ins and outs of Social Security to make sure you are maximizing your benefits, check out this free on-demand webinar: Savvy Social Security Planning – What Baby Boomers Need to Know
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Zack Swad is a fee-only financial planner located in Santa Rosa, CA serving clients locally and across the country (virtually).
He specializes in financial planning and retirement planning for people age 50+. As a fee-only, fiduciary, and independent financial advisor, Zack Swad is never paid a commission of any kind, and has a legal obligation to provide unbiased and trustworthy financial advice. He has been in the finance industry for over 11 years. He previously worked for a Fortune 500 Financial Services company, managing a practice of $800 million for 300 clients. Zack then went on to build his own firm, Swad Wealth Management, LLC so he could make a deeper impact in his client’s lives. In his free time, Zack enjoys spending time with his wife Elise, playing board games, piano, and singing.
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