1) The age you start taking benefits matters
You can start Social Security benefits as early as age 62, but that may not be your best option. If you take Social Security before your full retirement age, the amount you get per month will be reduced. For most people, full retirement age is between ages 66 and 67, depending on when you were born. If you take benefits at age 62, you will only get about 70% of your full benefit. This also works the other way around. If you wait until 70, your benefit will grow 8% per year until age 70. This can be a great way to maximize the benefit you get from Social Security.
2) You may be eligible for a benefit under your spouse’s record
If you don’t qualify for Social Security benefits from your own work record, you may qualify for a spousal benefit. If you are married and your spouse qualifies for Social Security, you are eligible to receive half of your spouse’s Social Security amount along with your spouse receiving their own full amount.
3) Your Social Security may be taxed
Up to 85% of your Social Security could be taxable, depending on what your income is. To figure this out, take half of your Social Security and add that amount to any other taxable income you may have. That includes any money you’re taking out of tax-deferred retirement accounts. If that number is above $34,000 for single filers or $44,000 for married filing jointly, then 85% of your Social Security will be taxed.
4) Social Security was not meant to be the main source of retirement income
The government did not originally intend Social Security to fully replace income for every retiree. It was only ever meant to be a supplement and cover less than half of your income needs. This means you need to make sure your savings for retirement are adequate, so you have enough income in retirement.
5)Social Security is not going bankrupt
Social Security isn’t going bankrupt, but things will likely be changing. Estimations say the Social Security trust fund reserves will be depleted by 2034 unless changes are made. There have been many proposed solutions. None of them are particularly attractive, but something must be done. While nothing is official yet, here are some possible solutions:
-Raising the full retirement age
-Raising the amount of income subject to Social Security tax (currently at $132,900)
-Raising the Social Security tax rate
-Reducing cost of living adjustments, which help Social Security keep pace with inflation
-Reducing benefit amounts