Retirement seems a suitable reward after a lifetime’s successful career. The Social Security Administration is not always in a position to guide potential beneficiaries step-by-step on how to access their benefits.
Those individuals able to make optimal use of the SSA are your widows, widowers, retirees, and children. It is relatively unethical for an SSA representative to guide individuals into the optimal use of their SSA benefits.
Financial advisors, in turn, have free rein in this department and can divulge as many industry secrets as possible that will benefit their clients and potential clients.
Taking a moment to pause and reflect on things
One of the wonderful things about Social Security benefits is the fact that you can start and stop, and start benefits as required. Withdrawal of a claim is only allowed once per lifetime, though. The fine print dictates that this process can only be done at full retirement age or within 12 months of starting it.
This allows one to claim a larger amount at a later stage. If this is done without you reaching your full retirement age, you will be liable to pay back the benefits already received, and they could be placed on hold.
Full retirement age is important
Full retirement age is the age at which maximum retirement benefits are received. For example, if your full retirement age is 66, your monthly benefit amount would be $1,000.
Retiring at 62 will leave you with $750 in your pocket. Waiting till the ripe old age of 70 will score you with a monthly check of $1,320. Utilizing retirement benefits earlier than predicted can leave you with a smaller monthly payment check, but the benefit duration will be longer. Waiting before claiming will gift you a higher monthly payment but a shorter benefit duration.
What happens with the whole tax dilemma?
Social Security benefits are taxable and dependent on a “combined income”. Calculating the gross income received, tax-exempt interest, and half of the Social Security benefits will determine the combined income.
Based on your tax filing status, it will indicate whether or not you will pay income tax on your benefits. Taxes such as these can be issued at the federal and state levels.
How to ensure your slush fund is beneficial
Retiring at the age of 70 seems to be prime. Being able to survive until then is somewhat of an art form. Putting away a portion of money each month in a slush fund is wise.
This will help you to survive to maximize retirement benefits. Performing this action continuously throughout your life and with whatever funds become available will help with the longevity of the benefit.
Having jam on both sides of your sandwich
Working and benefiting have no limitations. Working whilst not yet under full retirement age has limits. Exceeding the income threshold can leave you in the throes of deductions concerning your benefit amount, something to the likes of $1 for every $2 above the threshold. No benefit penalization takes place at full retirement age, it may just affect your tax liability.
Incorporating Social Security into retirement planning seems a wise decision. Discussing matters with a financial advisor will help one to make the correct decisions ideal for each individual’s circumstances.
Online systems such as the Social Security calculators can also help one determine what benefit amounts one may be entitled to. Based on all this, it can help you to plan what your retirement benefit will be, if any additional income will be required, and what the long-term consequences thereof will be on everything.
These steps are crucial as you do not want to forfeit something in the long run due to a mistake in the short run.
