5 Considerations to Make about Social Security Benefits

There are some important considerations that you must evaluate when determining when to apply for your Social Security Retirement benefits.  (These are different than the factors in determining when you should apply for Disability benefits or Supplemental Security Income.)

Social Security Retirement benefits are generally determined by the number of years you paid into the Social Security system and how much you earned in those years.

Social Security may provide a significant portion of your income in retirement. However, one of the largest mistakes today’s retirees can make is to underestimate just how important Social Security is to their retirement income strategies.

Here are 5 considerations regarding Social Security benefits and strategies for when and how they should be claimed.

1. Age

The earliest age at which you can file for Social Security is 62. Most people don’t realize that this does not mean you’ll be able to collect your full benefit at that time.  If you apply at age 62, the Social Security Administration reduces your benefits by 25 percent if your full retirement age is 66, or by 30 percent if it is 67. Remember that this reduction in benefits is permanent, so collecting benefits early may often be the wrong choice.

Also, the longer you wait to apply for your benefits, the smaller is the reduction from your full benefits.  This is a “sliding scale” calculation.  So, if you wait until you are 63 to apply, your benefits may only be reduced by 20 percent.  If you apply at age 64, could be reduced by approximately 15%.

You are eligible to collect 100 percent of your personal benefit at your full retirement age, which is age 66 for anyone born between 1943 and 1954, age 66 plus a two-month delay for those born between 1955 and 1960 and age 67 for anyone born after 1960.

Keep in mind that if you are able to wait until your full retirement age, you’ll qualify for 100 percent of your Social Security benefit.

2. Timing

You may ask yourself, “When is the right time to file for benefits in the first place?” Unfortunately, there is no universal answer. Everyone has a different personal situation and while there is no exact time to file, choosing the correct strategy for your own circumstance can dramatically affect how much you are able to collect over your lifetime.

Analyze your situation. Are you in good health? Can you continue to work?  If so, try waiting as long as possible before claiming in order to receive a larger benefit.  This is often the preferred strategy if you or your spouse are generally well and expect to live past the age of 80. On the contrary, if you’re in poor health and need the income, an earlier redemption of Social Security benefits may be the right move.  (However, if you are in poor health, you can apply for Retirement benefits and also apply for Disability benefits at the same time.  If you are found disabled by Social Security, you will receive the full 100% of your benefits, as if you worked until full retirement age.)

3. Spousal Benefits

Married couples must consider how their Social Security claiming strategies will affect each other’s benefits and income in retirement.

This is an important factor especially when one spouse is significantly older than the other, or earned substantially more during their career. Your spouse’s benefits are based on your personal benefit. This means that the age at which you file will have a major effect on what your partner is eligible to collect as a spouse.

4. Strategy

There are advanced claiming strategies to be aware of if you are married. These considerations may help to increase your lifetime benefits overall.

“File and suspend” occurs when the higher-earning spouse files for benefits at his or her full retirement age and then suspends the claim. One spouse collects spousal benefits while the higher wage earner’s benefits continue to accrue credits.

The “spousal benefit change-up” means the lower-earner claims benefits at full retirement age and allows the higher-earner to claim a spousal benefit at full retirement age while the personal benefit continues to accumulate. At age 70, the higher-earner switches to collecting his or her larger personal benefit.

5. Taxes

Unfortunately, retirement does not mean retiring from worry about taxes. If you collect substantial income from sources like wages, investment income, rental properties or any other source reported on your tax return, you will very likely owe taxes on your Social Security benefits.

The tax rate you’ll pay depends entirely on your overall income bracket since benefits are treated as income. However, you will never have to pay taxes on more than 85 percent of your Social Security benefits.


Keep these five considerations in mind as you, or someone you know, approaches the collection of Social Security benefits. It is important to remember that not every case is the same and that there are many factors that may contribute. For more information regarding Social Security benefits, contact Jeff Scholnick. For specific tax issues as well as tax planning, you should talk to your accountant.

Also, the Social Security Administration has a pamphlet on line that may give additional helpful information.  Called “What You Need To Know When You Get Retirement Or Survivors Benefits,” can be found on the Social Security Administration website at: