5 Questions about Filing for Social Security

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.

1. When Can I Claim My 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:

  • Age 62: You can claim a percentage of your benefit.
  • Full Retirement Age (FRA): You are eligible to receive full benefits. Social Security calls this your full retirement age, and it depends on the year you were born.
  • Age 70: You are eligible for maximum Social Security benefits.

Drawing Social Security Early May Not Be the Best

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:

  • Do you have other sources of income you can rely on?
  • How is your health?
  • How will this affect your spouse or children?
  • What is your current level of debt?

2. How Do Spousal, Survivor and Ex-Spouse Benefits Work?

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.

Spousal Benefits

Spouses are eligible to receive 50 percent of the primary worker's benefit or their own benefit amount, whichever is higher.

  • Must be married for at least 12 months
  • Can't apply for the benefit until your spouse has filed

Survivor Benefits

Survivor benefits are similar, except the survivor receives the either the deceased spouse's benefit or their own benefit, whichever is higher.

  • Surviving spouse is age 60 (50 if disabled)
  • Must be married at least 9 months prior to death, unless an accidental death

Ex-Spousal Benefits

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.

  • Age 62 or older and not remarried
  • Marriage lasted more than 10 years

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.

3. Can I Work and Claim Social Security at the Same Time?

Yes, although your benefits may be reduced depending your full retirement age and your income. For 2018, here's how this would look:

Age Earnings Limit Benefit Reduction
Before FRA (65, 66 or 67) $17,040 For every $2 over this limit, $1 is withheld from your benefit.
Year You Reach FRA $45,360 For every $3 over this limit, $1 is withheld until the month you reach FRA.

4. Will I Pay Taxes on My Social Security?

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.

5. What If I Have Unpaid Debts?

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.

Know Your Options Before Retirement

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.

Al Chingren
Al Chingren

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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.