If you are one of the millions of Americans approaching retirement, one of the most important factors of your future financial security is Social Security. Claiming your long-awaited benefits may seem like a daunting task, however, there are some key steps to take to ensure you are receiving the right benefits at the right point in your life. While the disability advocates at Disability Associates focus on Social Security Disability Income or Supplemental Security Income, we are happy to discuss what you should know—and the right questions to ask—when claiming Social Security Retirement.
When and How to Apply for Social Security Benefits
According to the Social Security Administration (SSA), you may apply for retirement or spouse’s benefits three months before you turn age 62, or four months before you wish for your benefits to begin. To get started, you can complete an online application, visit a local Social Security Office or call 1(800) 772-1213. If you require an interpreter, the SSA will provide one upon request, free of charge.
When you choose to apply for Social Security, you will have to provide documents to show that you are eligible to receive benefits, so having information and key documents available will help you to complete your application in a timely fashion.
You will need to provide information regarding yourself, your spouse and children, bank or financial institution, employer information, past earnings and more. Depending on your history, the SSA may also need to see certain documents, such as a birth certificate, proof of citizenship, copy of your W-2 form(s) or more.
The Amount of Income You Should Expect
It is important to remember that Social Security is designed to supplement income in retirement on a monthly basis, and not entirely replace your pre-retirement income; Social Security benefits typically represent around 40% of pre-retirement income for retired individuals. As you apply for—or move closer towards applying for—benefits, understanding how Social Security income is calculated will help you to manage expectations for retirement and weigh your options regarding additional forms of income, such as an IRA or 401(k).
Social Security calculates your benefits by adjusting your highest 35 years of monthly income for inflation and then averaging the income. Next, “bend points” are applied to adjust for various economic factors.
These bend points mean that people with lower average monthly income will have a larger proportion of their income replaced than people with higher average monthly income. For example, if you were born in or after 1954, then you would get credit for 90% of your average monthly income up to $895, 32% of any income between $885 and $5,397, and 15% of income above $5,397.
Questions you Should Ask Before Claiming Benefits
Even though Social Security accounts for more than half of retirement income for 71% of single retirees, many Americans don’t fully understand how it works or have the time to learn everything about it. As experienced Social Security attorneys, we can examine some of the most common questions you may run into before or during the claims process.
What is the Right Age to Claim Retirement Benefits?
Your full retirement age is the age at which you qualify for 100% of your benefit amount, and it depends on your birth year. In 2018, the full retirement age is 66 and four months, but that will increase by two months per year until it reaches age 67 for people born in or after 1960. If you claim early, you will be subject to a reduction of five-ninths of 1% per month for the first 36 months and five-twelfths of 1% for each additional month that you claim before full retirement age.
However, if you wait to claim your retirement benefits, you will be rewarded with delayed credits that increase your benefit by two-thirds of 1% for every month you delay your claim. Therefore—in short—if you can afford to hold off on collecting benefits, you will bring in a bigger check each month.
Are Social Security Benefits Taxed?
if you are single and your provisional income exceeds $25,000, or married and your provisional income exceeds $32,000, you will have to pay taxes on at least some of your Social Security income. The good news is that no one pays taxes on more than 85% of one’s Social Security income, but calculating your provisional income is a great way to be prepared.
Can I Claim Disability Benefits and Retirement Benefits at the Same Time?
In short, no. You cannot receive both retirement and disability benefits at the same time. The purpose of the Social Security Disability Program is to provide income for those who are unable to work because of their condition(s) and are too young to receive retirement benefits. Note that, if you do collect disability benefits, they will be converted to retirement benefits when you reach full retirement age.
There is however, one exception to this standard. If you applied for disability benefits before retirement and then chose to retire early—which is possible beginning at age 62—to begin collecting Social Security Retirement Income, you can end up earning both if you are approved for disability income in the future.
For example, if you stopped working due to health problems, started to collect early retirement benefits for a time, and then, were approved for disability benefits, Social Security will make up the difference between the early retirement amount and the full disability amount for those months you were disabled but receiving early retirement benefits (retroactively).
Will Having a Lawyer Help?
Typically, an attorney is not necessary for claiming standard Social Security Retirement income. However, having an attorney when claiming Social Security Disability Income or Supplemental Security Income is extremely beneficial. The experienced disability advocates at Disability Associates can help you throughout the entire process. Contact us today for more information on how we can help!