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5 Questions Baby Boomers Should Ask Financial Advisers About Social Security Benefits

Although retirement can seem like a welcome relief to those of us who work long hours, the fact is that you still have to maintain a source of income after you stop working, lest you wind up destitute. For many Americans, Social Security is the primary method of receiving money after they retire, which means that it’s essential to understand as much about it and how it affects you as possible.

The best way to find out more information is to speak with a financial advisor who is fluent in Social Security regulations. This way you can figure out how to maximize your benefits and ensure that you will stay financially solvent in your golden years.

With that in mind, let’s look at the most vital questions to ask your advisor about Social Security.

#1. When Am I Eligible to Receive Social Security Benefits?

For many people, they want to start collecting retirement income as soon as possible. However, it’s usually better to wait until the full retirement age so that you can get more money overall. Technically speaking, you can be as young as 62 to apply for Social Security in retirement at a reduced amount, but a more optimal age would be your full retirement age which is between ages 66 and 67 depending upon your year of birth.

Age is only one requirement, however. You are also required to have paid into the system for at least 40 quarters. If that isn’t an issue, then the next thing you want to consider is whether you’ve paid into Social Security for at least 35 years. This is because the Social Security Administration bases your monthly income on the average of those years. Best of all, if you worked more than 35 years, those with the least amount of earnings are dropped, helping boost your monthly average.

Overall, it’s imperative that you discuss with your advisor the best time to apply for your benefits. Even though you may be eligible now, it might be better to wait.

#2. How Much Can I Receive from Social Security?

On average, Social Security recipients receive about $1,400. However, if you’re married, then that number can go up. There are a few other factors that can increase your monthly earnings so that you don’t have to rely as much on savings and other forms of retirement income.

Delayed Retirement Credits

Talk to your advisor to see how much you can make by waiting until age 70 to retire. Usually, retirees can increase their Social Security checks by eight percent annually. However, after 70, that stops, so there’s no incentive to wait any longer than that to apply.

Continued Work

If you still pay into the system after you reach retirement age, you can further maximize your benefits. Although it may seem exhausting to keep working into your golden years, it might be worth it if you can shore up your retirement plan in the process.

Other Income

Talking with your financial advisor will also allow you to determine how much you need to make based on your savings and additional retirement income, such as a 401k. By taking a comprehensive approach, you may discover that you can retire early (i.e. at 62) without putting yourself in financial danger. Overall, it’s essential that you plan and get a detailed look at your finances before you apply for benefits.

#3. Will I Be Taxed on my Benefits?

This is a complicated question, and the answer is dependent on a variety of factors. Your tax bracket, the state you live in, and the amount you earn are all considered when taxes are involved, so it’s imperative that you discuss these issues with your financial advisor. In the end, you want to determine the best course of action for you so that you don’t have to pay any more taxes than are necessary.

#4. Is My Spouse Covered By Social Security?

Typically speaking, if you’ve been married for over a year, then your spouse will automatically be covered. However, if he or she is also claiming retirement benefits, then that could counteract any spousal benefits that you could receive.

Your financial advisor will be able to help you determine how to calculate the benefits for both you and your spouse, and figure out if you can make more individually than as a couple. Also, if your spouse is not close to retirement age, that could affect things as well. Again, your advisor will be able to work with you to determine what options you have and how they will impact your benefits.

#5. Do I Have to Stop Working to Receive Benefits?

The short answer to this question is no. However, there are a few things to remember when figuring out the best time to apply for Social Security. For example, if you’re between the ages of 62 and 65, your full retirement age your income has to be below a certain limit; otherwise, the SSA will withhold more money from you.

After you reach full retirement age, you can work and earn as much as you want without it affecting your benefits. However, it’s vital that you talk with your financial advisor to see if that’s even necessary, or how much you should try to earn. Also, some companies have their own retirement rules, which means that you may have to find work elsewhere after you reach the required age.

The Bottom Line: Create & Work a PLAN!

Retirement can be an overwhelming process, especially if you don’t have a plan in place. Taking advantage of Social Security can ease the burden, but it’s vital that you talk with a qualified financial advisor to ensure that you are going to make the most out of your retirement.

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