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When You Get Social Security Benefits, There Are Three Things You Need to Remember

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While it may seem simple to figure out when to get Social Security, there are many factors that can have a big impact on how much you get in benefits. These factors include having multiple sources of retirement income or having a spouse.

A CPA at Premier Social Security Consulting says that “a lot of people think that the nice people at the Social Security Administration will help you.” Marc Kiner, a CPA at Premier Social Security Consulting, agrees. It’s not going to happen.

In order to get the most out of your Social Security benefits, it’s important to know what can affect how much you get in benefits. This is a list of three things that people should think about when they get Social Security money.

If You Get Social Security Benefits, You May Have to Pay Income Tax on Them

  • The value of your spouse’s benefit is based on when they choose to get it.
  • You may be able to stop getting benefits in order to get the most money possible for you.
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When You Get Social Security Benefits, There Are Three Things You Need to Remember

Social Security: What You Need to Know About Social Security

First, let’s make sure we know some basics about Social Security. By looking at a person’s 35 highest-earning years, the Social Security Administration comes up with the primary insurance amount (PIA), which is how much money a person will get from the Social Security system.

Workers can start getting benefits at age 62, but if they don’t wait until they reach full retirement age, their benefits will be cut back by half. Full retirement age varies based on when you were born. It is between 66 and 67 years old.

If you wait until you’re at full retirement age to get your benefits, you can get all the money that you’re entitled to, 100% of it. For every year after full retirement age (until age 70) that you don’t get benefits, your benefits will rise by 8% each year.

1. Social Security benefits may be taxed if you make a certain amount of money.

If you’re getting Social Security benefits at or after full retirement age, your benefits may be taxed by the government. With other sources of retirement income, up to 85% of benefits could be taxed.

Pre-tax retirement accounts, like 401(k)s and traditional IRAs, usually count as income when they’re used to pay for things. This means that retirees who take money out of pre-tax retirement accounts should expect their Social Security benefits to be taxed more or less based on how much money they take out of those accounts.

Read More: Live updates on the Fourth Stimulus Check: $200 in Social Security, $8,000 in Child Tax Credit, and a 2% increase in the Consumer Price Index in 2022

People who put money into a Roth IRA or a Roth 401(k) pay taxes on that money before they put it in, so the money isn’t counted as income when it’s taken out.

With a Roth IRA and a Roth 401(k), people pay taxes on the money they put in at the start, which lets their investments grow tax-free. People who work for a company that doesn’t have a Roth 401(k) account can open one with a Roth IRA.

Choose the best Roth IRAs based on things like whether there is a minimum deposit, the number of investment options, and how easy it is to use the service.

The Social Security Administration decides how much of an individual’s or a couple’s benefits are taxed by looking at their combined income. Combined income is made up of your adjusted gross income, your nontaxable interest, and half of your Social Security benefits that you don’t have to pay.

The IRS has an online tool that can help you figure out if your benefits are taxed by the federal government and how much of your benefits are taxed by the government.

2. The value of your spouse’s benefit is based on when they choose to get it.

It is possible for spouses and ex-spouses to get money from Social Security because of their partner’s work history. The Social Security Administration works out whether an individual gets more benefits from their own work record or from their spouses’ work record and then gives them the higher amount.

The spousal benefit can be worth up to 50% of the higher-benefit, earners but it doesn’t have to be. At least 62 years old to get the spousal benefit. You can only get it when the higher-earner starts getting their benefit, and you can only get it after that.

To get the most out of the spousal benefit, people should wait until they reach full retirement age before taking it. As soon as a person is at full retirement age, he or she can get half of what the higher-earning person gets. As soon as you reach full retirement age, your benefit will be cut by a certain percentage for every month before that.

The value of the spousal benefit doesn’t change whether the higher-earner takes their benefits at or before full retirement age. Whether the higher-earner waits until full retirement age or not, his or her spouse can get up to 50% of his or her benefit.

When You Get Social Security Benefits, There Are Three Things You Need to Remember

Kiner says that even if the higher-earner gets their money before their full retirement age, like at age 64, their spouses still get 50% of their money when they reach full retirement age.

Read More: Woman Admitted Stealing Father’s Social Security Payouts | Be on Guard!

Then, if an ex-spouse was married to their ex for at least 10 years, they can get benefits from their ex’s work record. Because the traditional spousal benefit requires that the higher-earner get their own benefit first, people can get their ex-spouse benefit even if the worker hasn’t yet.

You’ll need to have been divorced for at least two years before you can apply. You must also be at least 62 years old to apply. If you wait until you’re at full retirement age, you can get the most money. At full retirement age, you’ll get 50% of what the worker gets. If your later marriage is annulled, divorced, or killed, you can’t get Social Security benefits on your ex-record spouse’s unless your new marriage is also over.

If you want to get more money, you might be able to stop getting your benefits for a while.

As soon as you start getting Social Security retirement benefits, you don’t have to keep getting them for the rest of your life. To get more of your benefits, you can put your benefits on hold after you reach full retirement age.

As soon as you reach full retirement age, your benefits rise by 2% to 3% each month or 8% each year. Suspending your benefits after you’ve started collecting allows you to earn more because you can earn more time.

For every month you choose to hold off on credit, you’ll earn 2% to 3% more each month. After you stop getting Social Security benefits, you can also ask the government to start paying you again at any time before you turn 70. However, if you have someone, like a spouse or an ex-spouse, who is getting benefits on your work record, they won’t be able to get benefits.

Read More: Social Security: When Your Provisional Income Can Lead to 100 percent Tax-Free Benefits.

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