What You Need To Know About Social Security Retirement Benefits

What You Need To Know About Social Security Retirement Benefits


Did you know?  Social Security began as the “Old Age, Survivors and Disability Insurance Program” and paid retirement benefits as a lump sum amount in its initial 2 years.  The first program beneficiary, Ernest Ackerman, received a lump sum payment in January 1937 of only 17 cents.  Fortunately, times have changed!


Social Security is a family-based economic security program covering benefits for monthly retirement pay as well as survivor, disability, and nominal death benefits.  This article will focus on retirement pay.


When should you begin collecting? Who is eligible? Will taxes be paid on benefits?

  • The decision of when to take Social Security is highly dependent on your circumstances. You can begin taking it as early as age 62, wait until you have reached full retirement age (FRA) or even delay until age 70. While there is no correct answer, the rule of thumb is that if you can afford to wait, delaying benefits can pay off over a long retirement as shown in this illustration based on an FRA of 66.  It is important to note that a claim made before your FRA produces a permanently reduced benefit.  For married couples, the timing decision can be critical to the financial well-being of a surviving spouse since claiming an early benefit can in turn cause spouses to receive reduced benefits.


Full Retirement Age was 65 until recently when the age began increasing for those born in 1951 and later. 

Click here to see the chart.



To be eligible to receive retirement benefits, a person must have earned 40 credits as a covered worker. Typically, 4 credits are earned each year which requires a person to work 10 years to qualify.  Check your benefits either on the statement sent by The Social Security Administration to workers age 60+ who are not yet receiving benefits or access the online My Social Security account.  This is a helpful tool to see estimated benefits and to verify that earnings are correctly reported on your account.

  • Eligibility for married couples has many variables to consider for receiving the most value from their Social Security Benefit.  Here is a summary of some points to consider.
    • Benefits are provided for both a worker and the worker’s spouse even if the spouse never worked. For a non-working spouse, the maximum spousal benefit is equal to 50% of  the working spouse’s benefit at the non-working spouses FRA.
      • Spouses who work & contribute to Social Security can claim benefits in their own right or as a spouse and will receive the higher of the two amounts.
      • To claim a spousal benefit a spouse is eligible at age 62, and the working spouse must have filed for his/her own Social Security benefit (Different eligibility rules apply to divorced spouses and surviving spouses.)
It’s important to note that there is no benefit to waiting to claim a spousal benefit beyond a spouse’s full retirement age. Unlike a worker’s retirement benefits—which receive delayed retirement credits— spousal benefits do not continue growing past the spouse’s full retirement age.



Taxation of Social Security Benefits currently falls into one of three categories for income tax purposes

  • For most recipients, retirement benefits remain tax free.
  • For some recipients, up to 50 percent of benefits are taxed.
  • For the most affluent retirees, up to 85 percent of Social Security retirement benefits are considered taxable income.


Whether benefits will be taxable depends on a person’s income tax filing status—single or married filing jointly or separately—and the amount of his or her income. Individuals whose income exceeds certain threshold limits may find that part of their Social Security retirement benefits will be taxed.


Taxes and other factors can affect claiming decisions, so please contact us to discuss your unique situation. In fact, The Lifetime Financial SolutionTM  can provide clarity to these questions.

If you have questions about Social Security Benefits, please contact us. We’d be happy to talk with you about your unique situation.



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