02 Mar Social Security Benefits
Throughout your lifetime you are required to be paying into Social Security Taxes. Eventually the time will come to where you want to regain that balance you have been paying that will help you greatly throughout your life after retirement. There are many steps that are crucial to having a successful retirement plan and knowing the necessary steps to take just before claiming Social Security. Here we will be covering what steps you should be taking in order to claim your Social Security in a smooth manner and how to best set up your future years in retirement.
When you are fully confident in your ability to claim Social Security, one of the main things to reconsider that we have covered many times is that you truly are working till your full retirement age also known as your FRA. By doing so, you will help to receive the appropriate monthly payments you should be receiving. If you cut it short, your monthly benefits will be reduced significantly so keep this in mind! Also be mindful of your family. Including them can help with additional benefits if you are to have a child under the age of 19 for example.
For 2021, if you have not yet reached your full retirement age (FRA), $18,960 is the threshold or income limit in which you can not surpass. If you are to go over this limit, unfortunately your benefits will be receiving a cut. On the bright side, for 2021 the limit for each year has been set to $50,520 for those who will be reaching their full retirement age. This is a 166% increase in comparison to those who are not reaching their FRA.
With that in mind, if you are to exceed this limit and go over the limit set in place, for every three dollars over the limit your benefits will be cut by one dollar. This used to be for every two dollars over the limit, your benefits were cut by one dollar. This is not to fear though, your income limit is much higher and way more manageable to deal with.
Next option you can resort to is hiring a financial advisor or budget planner to help organize your income in a manner that will last you during your retirement years. Also, depending on if you are married or not, you and your spouse can take a different route which may be more effective for you both.
A common route that some couples take when both approaching their retirement ages are claiming their Social Security benefits at different ages. This happens often if a couple decides they will need their retirement benefits sooner due to current obstacles they are facing and decide to let the other claim their benefits at their FRA for the full amount of benefits.
For example, one spouse claims their retirement benefits at age 65 and the other claims theirs at 70 years old. Doing so can help to cover more years while spreading your benefits out and not relying on both accounts of Social Security benefits at the same time from the start. With that in mind, both spouses could also wait till age 70 to both claim their benefits and doing so at age 70 would drastically increase their benefits combined by almost ¼.