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By Al Chingren - May 18, 2018
Social Security brings a lot of questions to mind—especially when you get closer to retirement. I want to share the five questions I'm asked most often when talking to folks about filing for Social Security benefits.
The short answer is 62, but the longer you wait, the higher your benefit will be. The amount depends on your age when filing:
Filing at 62 will reduce your full retirement age benefit by 25 to 30 percent. Delaying until age 70 can increase benefits to 124 or 132 percent, depending on your full retirement age.
Assumes Full Retirement Age is 66. Increased benefits for delaying Social Security max out at age 70.
So, when should you claim benefits? Besides age, consider other reasons to file earlier or later:
If you're married, or ever have been, it's important to consider whether your spouse or ex-spouse's benefits can boost your own Social Security payments. Let's go through each one.
Spouses are eligible to receive 50 percent of the primary worker's benefit or their own benefit amount, whichever is higher.
Survivor benefits are similar, except the survivor receives the either the deceased spouse's benefit or their own benefit, whichever is higher.
Former spouses may be eligible for 50 percent of an ex-spouse's benefits. If the couple has been divorced at least two years and both are at least 62, the ex-spouse can receive benefits even if still working.
Additionally, children up to age 18 (19 if a full-time high school student) and disabled children (even if 18 or older) may be eligible for benefits. Benefits are generally available only to unmarried children.
Yes, although your benefits may be reduced depending your full retirement age and your income. For 2018, here's how this would look:
Maybe. It depends on your income and whether you file single or joint taxes. A couple with a combined income between $32,000 and $44,000 may have 50 percent of their benefits subject to their regular tax bracket. The amount subject to tax rises to 85 percent if they earn more than $44,000.
To spread out the burden, you can ask the Social Security Administration to withhold federal taxes from your monthly benefit when you apply.
Private creditors can't touch Social Security, but federal agencies can garnish the benefits. Child support, alimony, back taxes and home and student loan defaults can reduce your benefits.
Recently, unpaid student loans have had more of an impact. Since 2001, the government has collected about $1.1 billion from Social Security recipients of all ages for unpaid student loans. If you have debt, it may be wise to pay off as much as you can before retirement to help preserve your benefits.
Social Security may be a large part of your overall retirement investing plan, so it's important to understand all your filing options before it's time to claim your benefits. Contact the Social Security Administration three months before you retire or reach age 62. If you are over 62, review your options to decide when to start.
Socialsecurity.gov is a good resource, or you can call for an appointment at 1-800-772-1213. You can also find other articles about Social Security at americancentury.com.
Need help integrating your Social Security strategy into your retirement investing plan? Contact us to learn how we can help.
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Source: Social Security Administration (ssa.gov ) as of May 2018.
The opinions expressed are those of American Century Investments (or the portfolio manager) and are no guarantee of the future performance of any American Century Investments' portfolio. This material has been prepared for educational purposes only. It is not intended to provide, and should not be relied upon for, investment, accounting, legal or tax advice.