SOCIAL SECURITY

 

Your social security benefit is based on your earnings averaged over most of your working career. Higher lifetime earnings result in higher benefits. If you have some years of no earnings or low earnings, your benefit amount may be lower than if you had worked steadily.

 

Early Retirement

You can start your Social Security benefits as early as age 62, but the benefit amount you receive will be less than your full retirement benefit. If you take early retirement, your benefits will be permanently reduced based on the number of months you will receive checks before you reach full retirement age.

 

If your full retirement age is 65, the reduction for starting your Social Security at age 62 is about 20 percent; at age 63, it is about 13 and 1/3 percent; and at age 64, it is about 6 and 2/3 percent.

 

 

REDUCTION IN BENEFITS
FOR THOSE BORN 1943 TO 1954
5/9 % PER MONTH FOR 36 MONTHS
62	25%
63	18.3%
64	11.7%
65	5%

 

If your full retirement age is 67, the reduction for starting your benefits at 62 is about 30 percent; at age 63, it's about 25 percent; at age 64, about 20 percent; at age 65, about 13 and 1/3 percent; and at age 66, about 6 and 2/3 percent.

 

A retirement benefit, which starts at Normal Retirement Age, equals the worker’s PIA (primary insurance amount). But a worker who elects to have benefits start before Normal Retirement Age will receive a monthly benefit equal to only a percentage of the PIA (the PIA will be reduced by 5/9 of 1% (1/180) for each of the first 36 months the worker is under Normal Retirement Age when payments commence and by 5/12 of 1% (1/240) for each such month in excess of 36).

 

Age To Receive Full Social Security Benefits

Year of Birth	Full Retirement Age
1938 1939 1940 1941 1942 1943--1954 1955 1956 1957 1958 1959 1960 and later	65 and 2 months 65 and 4 months 65 and 6 months 65 and 8 months 65 and 10 months 66 66 and 2 months 66 and 4 months 66 and 6 months 66 and 8 months 66 and 10 months 67

 

As a general rule, early retirement will give you about the same total Social Security benefits over your lifetime, but in smaller amounts to take into account the longer period you will receive them.

 

It is a good idea to contact Social Security in advance to see which month is best to claim benefits. In some cases, your choice of a retirement month could mean additional benefits for you and your family.

 

TAXABILITY OF SOCIAL SECURITY BENEFITS

The amount of benefits to be included in taxable income depends on the person’s total income plus half his Social Security benefits. The higher the total, the more benefits a person must include in taxable income. A person may have to include up to 50% or up to 85% of benefits in his income.

 

50 Percent Taxable:

 

If a person’s income plus half of his Social Security benefits is more than the following base amount for his filing status, up to 50 percent of his benefits will have to be included in his taxable income.

 

·           $25,000 if he is single, head of household, or a qualifying widow(er).

            $32,000 if he is married filing jointly.

 

85 Percent Taxable:

 

If a person’s income plus half of his Social Security benefits is more than the following adjusted base amount for his filing status, up to 85 percent of his benefits will have to be included in his taxable income.

 

·           $34,000 if he is single, head of household, or a qualifying widow(er).

·           $44,000 if he is married filing jointly.