Social Security Retirement Income: A Primer

As you near retirement, you’ll likely have many questions about Social Security. What will be the amount of your retirement benefit? Will earnings from a part-time job affect your benefit? When should you apply?

How much will you receive?

Your Social Security retirement benefit will be based on the number of years you’ve been working and your earnings history, taking into account your 35 highest earnings years. Your age at the time you begin receiving Social Security also affects your retirement benefit.

Receiving benefits at full retirement age

Full retirement age is 66 for anyone born from 1943 through 1954 and increases by two months for every year thereafter until reaching age 67 for those born in 1960 or later. At full retirement age, you will be eligible for full Social Security benefits provided that you have worked in a job covered by Social Security and meet other eligibility requirements.

Receiving benefits earlier than full retirement age

The minimum age at which you can receive Social Security retirement benefits is 62. Your retirement benefit will be reduced by a percentage that is based on the number of months prior to your full retirement age that you begin receiving benefits. This reduction is permanent; when you reach full retirement age, you will not be eligible for a benefit increase.

Receiving benefits later than full retirement age

You will permanently increase your retirement benefit for each month that you delay receiving Social Security retirement benefits past your full retirement age. Your benefit will increase by a predetermined percentage for each month you delay retirement up to the maximum age of 70.

When should you begin receiving Social Security benefits?

Should you begin receiving Social Security benefits early, or should you opt to wait until full retirement age or even longer? There’s no ”right” time to begin receiving Social Security benefits; it depends on your personal circumstances, and there are many variables. Here are some questions that can help you make your decision.

Are you planning to work?

Your Social Security benefits will be recalculated annually if you have had any new earnings that might result in a higher benefit. However, if you’re receiving benefits and are under full retirement age, your wages or self-employment income may reduce your retirement benefit. When you reach full retirement age, you can earn as much as you want, and your benefit won’t be affected.

Note that the benefit reduction is based on your annual earnings and is not permanent. While you may forego current benefits because of your excess earnings, you’ll receive a higher monthly benefit later. That’s because the SSA recalculates your benefit when you reach full retirement age, and omits the months in which your benefit was reduced.

How will your spouse be affected?

If you’re married, you and your spouse should consider how Social Security will affect your joint retirement plan. If you are both eligible for benefits on your respective earnings histories, there are special planning opportunities you might evaluate. One alternative you might consider is to “file and suspend.” You apply for Social Security benefits, then request to have your benefit payments suspended. Your spouse can then file for spousal benefits, and you can accrue delayed retirement credits (up until age 70). While appropriate in some circumstances, the strategy isn’t for everyone.

Other factors to consider

In addition to the above, consider these important variables as you evaluate when to commence your Social Security retirement benefits:

  • Your life expectancy and your spouse’s life expectancy: consider health and family history
  • Your other sources of retirement income and the structure of your investment portfolio
  • Your anticipated tax situation
  • Your personal viewpoint on the long-term outlook for the Social Security system

The Social Security Administration’s handbook contains more than 2,700 rules that govern its benefits. Is it any wonder that deciding when to begin receiving Social Security benefits can be one of the most nuanced financial decisions you will ever face? To cut through the complexity, consider your personal circumstances, determine what’s important to you and seek the advice of your advisor.

Truepoint Wealth Counsel is a fee-only Registered Investment Adviser (RIA). Registration as an adviser does not connote a specific level of skill or training. More detail, including forms ADV Part 2A & Form CRS filed with the SEC, can be found at Neither the information, nor any opinion expressed, is to be construed as personalized investment, tax or legal advice. The accuracy and completeness of information presented from third-party sources cannot be guaranteed.

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