As you spend years working hard to make ends meet, you’re also contributing towards your retirement benefits. This builds your financial safety net when you are preparing for retirement. Thanks to this Social Security, you can enjoy a monthly income after you retire.
It’s essential to know and understand social security benefits in detail. Different factors contribute to the estimated figure you are likely to receive as your benefits. Some of these factors include;
- Years worked
- Monthly payments
With a detailed understanding of the topic, it becomes easy to plan your retirement like a professional.
The fact that this topic is broad and complex, this article will continue to share the most important things you ought to know about the topic. Enjoy reading!
What Are Social Security Benefits
People who benefit from such a program are retired, disabled, spouses, children, and survivors. The program is a federal benefit in the US aiming to provide partial income to those faced with difficulties or retired. It has a regulation that you need to meet for you to benefit.
Many people who meet the requirement to benefit from this program are sometimes denied. This happens mostly to disabled people. When such happens, you need to take legal action to file a lawsuit appealing to your claim.
It’s good when you know the process to handle your denied claim. However, it would help if you had an attorney specializing in the area. Legal practitioners at Terry-LawFirm.com often say that having an attorney will not only make things formal but can assist a long way when it comes to preparing your case. Attorneys in the sector understand the ins and outs of such cases, and this means that by hiring one, things will be solved sooner than you can expect. They are dedicated to helping you get full benefits that will support you and your family.
It is essential to pay into the Social Security program to gain 40 credits that qualify you for the benefits. Even a spouse can claim this based on the spouse’s work record. Please note that the service is taxable depending on your tax filing status.
When is the right time to collect your benefits?
When the time for your retirement comes, you qualify for your Social Security Benefits. Collecting the benefits can be done either before or after you fully retire. Whatever plan you consider has its pros and cons.
Suppose you decide to start collecting your benefits before retirement? Choosing this plan means that you’re likely to receive a 30% reduction of your benefits. This may seem like a perfect idea when you require cash early, but the benefits are less than when you request your benefits after retirement.
After full retirement, you will get close to 100% of your benefits. According to statistics, only one in four retirees receives 90% of their retirement benefits.
Sometimes you need an increased retirement credit to meet your needs. You can get up to an 8% annual accumulation of your benefits when choosing delayed retirement credit. This is available after your retirement age is 70 years. The problem with this is that you will collect your benefits for a short period.
How to Calculate Your Social Security Benefits
A large number of the population in the US relies on social security after retirement. According to statistics, not many retirees get 90% of their retirement income from the program.
Although you may be depending on your savings after retirement, it’s crucial to have a rough idea of how much you can expect from the program. If you qualify for social security, your monthly benefit is based on two factors, which are;
- The amount you have earned during your working career
- The age you have chosen to start getting payments, as mentioned earlier
As hinted earlier, social security considers 40 credits over your working career for qualification. However, they use 35 years of your work history to calculate the monthly payment. So, if you worked for less than 35 years, the SSA will use zero for some years.
This, therefore, means that the higher your earnings over those 35 years, the higher the benefit you will receive. Unfortunately, getting the actual figure isn’t as easy as it may sound. So, if you are curious about the estimates, it’s better to request them from the SSA. This should give you an estimate at age 62 and age 70, depending on your work history. Additionally, you can make use of the SSA’s calculators to plan your retirement and find out the best age to start claiming your benefits.
How is social security taxed?
It’s essential to know how social security is taxed.
You should know that the taxation on your benefits varies with the income level. That said, it means that;
- If your income is between $25000-$34000 for an individual, or $32000-$44000 for a couple filing jointly, 50% of benefits are subject to taxation. Below that level, your benefits won’t be taxed.
- If your income is more than $34000 for both an individual and a couple filing jointly, 85% of the benefits are taxed.
If your child receives social security or survivor benefits, the payments aren’t subjected to taxation. That money can only be taxable if the child has enough income from social security or other sources to file a return on his name.
How does Social Security Spousal Benefit work?
When it comes to social security, marriage brings couples an advantage. That is, your partner can take up to 50% of your security benefit (spousal benefit). Say, for instance, if your benefit is worth $4000, but your partner benefit is only $1000, he or she can collect benefits worth $2000. This will bring in $1000 more income per month.
Calculating and claiming your social security benefit is a daunting process. To overcome these circumstances, you need to consult your financial advisor with experience in Social Security benefits analysis. This will help you understand more about Social Security and the right time to claim. The above-shared ideas can also be of great importance when it comes to understanding the topic in detail.