Four Things to Know Before You Take Social Security

Linda Migliazzo |

Preparing for retirement may be an exciting and stressful time. While the idea of leaving the workforce and enjoying more leisure time may be appealing, the prospect of no longer receiving a regular paycheck might be intimidating for some. As you put together your Social Security strategy, here are four things to consider before applying for benefits.

Get an Online “My Social Security” Account

Until recently, Social Security communications happened through the mail, telephone, or in-person at a Social Security office. These methods may still be available to you but, an online Social Security account at the Social Security Administration’s website helps you view your earnings history, see your benefit estimates or manage your payments.

You may activate your online “My Social Security” account at any time. It is generally a good idea to ensure your benefits history is accurate before you apply for benefits.

Your Full Retirement Age

Your full retirement age (FRA) is the age when you are eligible to claim your full retirement benefit amount. Taking Social Security benefits before you are FRA could mean a lower monthly benefit amount for the rest of your lifetime. Alternatively, waiting until age 70 to claim your benefits could provide you with a larger benefit amount.

However, there is no one-size-fits-all recommendation for when to retire. If one spouse has health issues, a lower life expectancy, or a more volatile job situation, claiming early Social Security benefits may make sense. Under other circumstances, delaying receiving your benefits until age 70 may be beneficial. A financial professional who reviews your situation may provide advice tailored to your circumstances.

Additional Retirement Income

Social Security serves as part of your retirement support along with any pension benefits you may have and personal savings. As private pensions disappeared in favor of 401(k)s, it might be a good idea for Social Security recipients to ensure they have more than one source of retirement income. Combining Social Security benefits with savings from a 401(k) or an individual retirement account (IRA), an annuity, income from rental property or even a part-time job may be a hedge against sudden and unexpected expenses that might arise during retirement.

Your Spouse’s Earnings Matter

If you are married and both you and your spouse plan to claim Social Security benefits, it is worth spending some time considering your options with the help of a financial professional. Evaluate each of your potential benefits, lifespans, and other factors to determine whether it 

makes more sense for one or both of you to delay claiming benefits. Generally, when one spouse dies, the other becomes eligible to receive a survivor’s benefit of 100% of the deceased spouse’s benefit for the rest of their lifetime. Alternatively, they may choose to keep receiving the benefits for their individual earnings if the amount is higher, but the surviving spouse cannot get both benefits.1

If one of you has a much higher potential benefit than the other, it may make more sense for that person to keep working until at least FRA or even to age 70. This strategy might perhaps positively impact the other spouse’s retirement benefit. Talking this over with a financial professional may give you some useful perspective on your options.


Important Disclosures

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual security.

All information is believed to be from reliable sources; however LPL Financial makes no representation as to its completeness or accuracy.

This article was prepared by WriterAccess.

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