Social Security Strategies
Paul: Hello, my name is Paul Ford, and I work for United Benefits. And during this segment we’re going to talk about Social Security strategies.
“When can I file for Social Security?” That’s one of the first questions people ask. First, if you are a widow or a widower, you are able to draw Social Security at the age of 60. But under your normal circumstances, the earliest that you could draw Social Security is once you reach the age of 62.
You also have what’s called full retirement age, which is normally between 65 and 67 years of age. And then you have the latest time that you can get your largest earnings and draw Social Security is at the age of 70. So what you have to realize, if you take Social Security before you reach your full retirement age, you’re going to be penalized on money that you earn over a certain amount, which for 2018 is $17,040 per year. And the way they’re going to penalize you: for every $2 you earn over this, they take a dollar away from you.
Then the year that you’re actually going to be turning your full retirement age, that amount goes up, and for 2018 that amount’s going up to $45,360. And if you take it during that year, and if you make over that amount of money, then for every $3 you earn above that they’re going to take $1 away from you. Now, once you meet your FRA, which is called your full retirement age, then you can have an outside job, and earn as much money as you want without being penalized.
These are the ages right now for your full retirement age. If you’ll notice, just an example: if you were born between 1943 and 1954, your full retirement age is 66. If you were born after 1960, the new full retirement age is 67. Social Security Benefits that are taxable, a lot of people ask, “Is Social Security taxable?” Folks, yes it is. And these just give you kind of an idea. As a single head of household, if you’re making between $25,000 and $34,000 a year, 50% of your Social Security will be taxable. If you’re making over 34,000, then 85% of your Social Security will be taxable.
If you are married filing jointly and you make $32,000 to $44,000 a year, then 50% of your Social Security will be taxable. If you’re earning over $44,000, 85% of Social Security is taxable. There is actually also the new maximum payouts for Social Security, because I’ve had people ask, “What’s the maximum anybody can earn on Social Security?” Well, there are limits. So if you make quite a bit of money, then you are going to be limited on what you’re getting out of Social Security.
And if you’ll notice, for 2018 those limits start at 62 at $2,159; full retirement age is $2,788; and your maximum retirement age 70 would be $3,698. That’s the most anyone is going to earn out of Social Security per month in the year 2018. This is a cool example of when a person can retire. I love it because you have an example here. A person can retire at 62. You’ll notice they’re making $1,500 a month. Then we’re going to full retirement age, say, at 66. At 66, they can make $2,000. Or if they waited until they were 70 they could make $2,640 per month.
After looking at these different Social Security monthly benefits, at different ages, let’s go to this next page and let’s go in here and say, “Which strategy basically is going to be right for me?” So should I take Social Security at 62, or 66? So if I take Social Security at the age of 62, I’m going to be making $1,500 per month. Now if I wait until 66, it’s $2,000 a month. That’s a $500 difference. So how much money would I have left on the table though, by not taking Social Security at 62? You take the $1,500 times 12, which is $18,000: a year times four years, and you’ve left $72,000 sitting on the table that you did not take.
What you have to think is –and this is where we sit down with you one on one– “How long do people in my family live? And will I live to that age?” We have representatives that are in your areas all the time, and at any time just reach out to United Benefits and we’ll be happy to set up an appointment to take care of your needs. Thank you very much, and have a great day.
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