Social Security

Social Security is financed through a dedicated payroll tax. Employers and employees each pay 6.2 percent of wages up to the taxable maximum of $168,600 (in 2024), while the self-employed pay 12.4 percent.

Follow the Link for the 800 Number, tips on the best time to contact SS, and Branch Locator: https://secure.ssa.gov/ICON/main.jsp#officeResults

Creating a Social Security account allows you to check your Social Security Statement, estimate your future benefits, and more: https://www.ssa.gov/myaccount/

Although you need at least 10 years of work, or 40 credits to qualify for Social Security retirement benefits, the benefit is based on your highest 35 years of earnings. If you don’t have a full 35 years of earnings when you apply for Social Security benefits, your benefit amount could be lower. Working additional years can boost your benefits by replacing those zeroes or low-earning years in the calculation, ultimately increasing your benefit amount.

The highest 35 years of earnings are used to calculate your average indexed monthly earnings. A formula is then applied to these earnings to determine the benefit amount you would receive at your Full Retirement Age (FRA), which is between 66 and 67 depending on your birth year. Starting benefits before full retirement age reduces monthly payments, while delaying benefits can increase them up to age 70.

Note: In the case of early retirement, a benefit is reduced 5/9 of one percent for each month prior to FRA, up to 36 months. If the number of months exceeds 36, then the benefit is further reduced 5/12 of one percent per month (https://www.ssa.gov/myaccount/assets/materials/additional-work.pdf)

Up to 85% of your Social Security benefits can be taxable, depending on your combined income.

(Click Image to Enlarge)


*Combined Income is your adjusted gross income (AGI) plus your nontaxable interest and half of your Social Security benefits from the year (minus certain deductions and exclusions).

When it comes to Social Security benefits, spouses have their own set of considerations and opportunities. Understanding how spousal benefits work can help you maximize your household’s financial security in retirement.

1. Spousal Benefits: Spouses may be eligible for Social Security benefits based on their partner’s work record. This means even if you haven’t worked yourself or have lower earnings, you could still receive benefits.

2. Qualification Criteria: To qualify for spousal benefits, you typically need to be married for at least one year. In some cases, you may also be eligible if you have dependent children.

3. Benefit Amount: Spousal benefits are generally up to 50% of the higher-earning spouse’s benefit amount. However, the actual amount you receive depends on factors such as your age when you claim benefits. A spousal benefit is reduced 25/36 of one percent for each month before Full Retirement Age, up to 36 months. If the number of months exceeds 36, then the benefit is further reduced 5/12 of one percent per month.

4. Effect on Own Benefits: Claiming spousal benefits can impact your own retirement benefits, especially if you claim before reaching full retirement age. If the primary worker is not receiving any retirement benefits yet, then the spouse could technically take their regular Social Security benefit as early as age 62. When the primary working spouse files for their benefit later you could switch to spousal benefits.

5. Survivor Benefits: In the unfortunate event of your spouse’s passing, you may be eligible for survivor benefits. The surviving spouse typically receives the higher of the two benefit amounts.

6. Maximizing Benefits: To maximize your Social Security benefits as a couple, consider coordinating your claiming strategies. By carefully timing when each spouse claims benefits, you can optimize your lifetime benefits. The maximum spousal benefit you can receive is 50% of the primary working spouse’s benefit at their full retirement age. So it may make sense for the primary worker to wait until FRA to start their SS benefit as that can increase a spousal benefit as well.

7. Additional Resources: For more detailed information on spousal benefits and to run calculations, visit the Social Security Administration website. https://www.ssa.gov/oact/quickcalc/spouse.html

Understanding your options regarding spousal benefits is an important part of planning for retirement. By making informed decisions, you can help ensure that you and your spouse receive the benefits you deserve for a secure and comfortable retirement.

As of 2024, the earnings limit for Social Security benefits applies regardless of marital status. For individuals who have not yet reached full retirement age, including both single individuals and married couples, the earnings limit is $22,320 per year. If you earn above this limit, $1 in benefits will be withheld for every $2 earned above the limit until you reach full retirement age. Once you reach full retirement age, there is no earnings limit, and you can work and earn as much as you want without any reduction in your Social Security benefits.