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Understanding Social Security Benefits and How to Maximize Them

Understanding Social Security Benefits and How to Maximize Them featured

Are you nearing retirement or facing a disability that limits your ability to work? Social Security benefits serve as a safety net for those who are no longer able to maintain their earning capacity. If you are someone who is looking to maximize your social security benefits or learn more about the government program, this article is for you.

What is Social Security?

social security benefits

Social Security is a government program aimed at providing financial assistance to US citizens or legal residents who are retired, disabled, or the surviving member of a family. The Program is funded by payroll taxes, with most of the funds allocated to retirement benefits. The program was established in 1935, and it remains a critical safety net for many retirees.

How are Benefits Calculated?

payroll taxes

Your social security benefits are calculated based on your lifetime earnings. The Social Security Administration review your income for your highest earning years and calculates your average monthly income over that period. This average income is then used to determine your total potential benefit amount.

When Can I Start Collecting Benefits?

retirement benefits

You can start receiving social security retirement benefits when you turn 62. However, the earlier you begin receiving the benefits, the less total you will receive in benefits. Meanwhile, the Full Retirement Age (FRA) is between 66 and 67 depending on your birthdate. If you wait to collect your benefits until after FRU, your benefit amount will increase.

How Can I Maximize My Benefits?

To maximize your social security benefits, you should consider delaying your benefits until after you reach full retirement age. If you delay collecting benefits until you are 70 years old, the maximum age, your benefits will increase about 8% each year. You may work while getting the social security benefits to obtain enough money to save for your retirement.

Are Social Security Benefits Taxable?

Your social security benefit amount may be taxable if your income surpasses a specific amount. For single filers, the threshold currently is $25,000, while it is $32,000 for joint filers. Additionally, some states tax social security benefits.

What Happens if I Work While Collecting Benefits?

You may be subject to a reduction in your social security benefits amount if you earn more than $18,960 per year while collecting benefits before your full retirement age. However, you can work and earn as much as you want without any affect on your social security benefit amount once you reach the full retirement age.

What Happens if I Become Disabled?

If you are unable to work due to disabilities, you may be eligible for social security disability benefits by accumulating a certain number of ‘work credits’ if you have worked for a specific period. The amount of your disability benefit will be based on your earnings history.

What Happens if I Die?

If you passed away, your surviving spouse may be eligible for social security survivor benefits based on your earnings history. The amount of the survivor benefit will depend on the full retirement age of your spouse and the earnings record.

Can I Get Benefits if I’m Not a U.S. Citizen?

While only US citizens or legal residents can collect social security benefits, some exceptions can apply to noncitizens from certain categories like refugees and asylees.

What Should I Do if I Have Questions?

If you have further questions about social security benefits, the best thing is to reach out to the Social Security Administration directly. You can contact them through a toll-free number or their website to learn about eligibility, the potential benefits you may receive, or questions to clear up any concerns you may have.

Author: Benjamin Lee

Author: Benjamin Lee

Benjamin Lee, our finance editor extraordinaire, is the financial guru we never knew we needed. With a sharp mind for analyzing markets and spotting investment opportunities, he's the go-to guy for all things money. But don't let his finance-focused persona fool you, Benjamin's interests extend beyond the world of finance. When he's not crunching numbers, you'll find him with his nose buried in a history book, or jet-setting across the globe in search of new cultures and cuisines. Benjamin is living proof that you don't have to be a boring suit-wearing banker to understand the intricacies of the financial world.

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