Social Security

You can take steps to increase the amount of Social Security you will receive. They may not always be the steps you want to take, but keep in mind Social Security is one source of guaranteed income that will also increase with inflation, so a small increase in your initial benefit will result in a proportionately larger benefit each and every year.

Any of the steps below will have a positive impact on what you receive; implement all three steps and you’ll be able to significantly increase the amount of Social Security benefits you are eligible to receive.

Benefit: Social security uses your highest thirty-five years of work history to calculate your social security retirement benefit. The highest thirty-five are calculated after each year of earnings has been indexed, or adjusted, based on inflation. Think of this calculation like an average; if you have a zero as one of the numbers, it will pull the average down. To increase your social security benefits make sure you have a full 35 years of work history.

Works if: You have less than 35 years of work history, or you have many low earning years listed in your 35 years, you are now earning more, and you can keep working so that some of your higher earning years will bump some of your lower earning years out of the top 35.

If you have less than thirty-five years of work history, one of the simplest things you can do to increase your social security benefit is to work. Having at least some earnings in each of those thirty-five years is better than having no earnings.

Learn more: For a detailed step-by-step guide on how your Social Security benefits are calculated and how extra years of earnings might affect your benefits see How to Calculate Your Social Security Benefits.

Social security also has several benefit calculators you can use to help you estimate your potential benefits. If you use their detailed calculator, which is a program you actually download onto your computer, then you can input your year-by-year earnings from your social security statement; then project earnings for future years to see if working longer or earning more would increase your social security benefits.

5 Key Things To Know About Social Security Retirement Benefits

Mistakes?

Avoid These Social Security Mistakes

Updated June 18, 2014

Americans miss out on thousands in Social Security benefits by making these Social Security claiming mistakes.

1. Ignorant About Spousal Benefits

When couples coordinate the claiming of their Social Security benefits, they get more. Most people look at when they should start their own benefits, but they don’t realize that depending on the differential in age and benefit amounts between them and their spouse, they might be able to claim a spousal benefit, while letting their own benefit continue to grow or vice-versa. Married couples miss out on thousands by not using their spousal benefits.

Learn more: Social Security and Your Current of Former Spouse

2. Think They Can Stop and Start

You can not turn off your Social Security benefits easily. If you change your mind about claiming within 12 months of filing, you can repay all your benefits and things will reset as if you had never claimed. But you cannot simply stop your benefits and then choose to start again later. Many people take Social Security benefits early, thinking if they find a job, they can stop benefits for awhile and start again later. Nope, you can’t do it.

Learn more: How to Stop Social Security Retirement Benefits

3. Don’t Know About the Earnings Limit

If you claim benefits before you reach your full retirement age (which varies by year of birth) and you earn in excess of the earnings limit (which is adjusted upward with inflation each year) then your Social Security benefits will be reduced. People thinking they can be fully employed and collect their Social Security benefits are often caught off guard when the Social Security office tells them they made too much money and they have to repay some of the benefits. Once you reach full retirement age, you can earn as much as you’d like with no reduction in benefits.

Learn more: Basics of the Social Security Earnings Limit

4. Underestimate Potential Survivor Benefits

As a married couple, the higher benefit amount will continue for the longest spouse to live. This means it is important to maximize the benefit of the highest earner, as it can provide a powerful form of life insurance: inflation adjusted income for as long as a surviving spouse needs it. Don’t claim early without considering the impact on a long-lived spouse.

Learn more: Social Security Survivor Benefits

5. Taxes? What, Taxes?

Yes, your Social Security benefits will be taxed. There is a complicated formula in the tax code that determines how much of your benefits will be taxed. It ranges between 0 and 85%. When you carefully determine which accounts to draw retirement income from in which order, and coordinate this decision with when you take Social Security, you can reduce the amount of taxes you pay over your retirement years. Unfortunately, many do not take the time to do this kind of withdrawal planning, and so they pay more tax than they would otherwise have to.

Learn more: How Taxes are Calculated on your Social Security Benefits

6. Don’t Know It Protects Against Their Number One Fear

In survey after survey, upcoming and existing retirees state their number one fear is running out of money in retirement. A smart Social Security claiming strategy can help protect against this outcome. Yet people claim with no analysis. Social Security benefits will provide over $1 million in benefits for many couples. Would you make a decision about $1 million with no analysis?

You can use a Social Security calculator, to help you avoid costly Social Security mistakes. It’s great to check out the calculators, and I recommend you play around with them, but coordinating when and how you take retirement withdrawals in a tax-efficient manner requires a great deal of expertise. See What a Good Retirement Planner Will Do For Me, and consider finding one before you claim.

Social Security – Understanding The Benefits download in PDF.

Taxes, Early Benefits, Earnings Limitations And More

Below are five key things you need to know about collecting social security retirement benefits; things like how working affects your benefits, if you will have to pay taxes on social security benefits, and how collecting benefits early affects you and your spouse.

1. Full Retirement Age And Your Social Security Benefits

Full retirement age (FRA) is based on your year and day of birth. It determines when you are eligible for full benefits, reduced benefits, or delayed retirement credits. It's also important to note that there is a different FRA schedule for your own benefits than for widow/widower benefits.

Full retirement age is the age at which a person may first become entitled to full or unreduced retirement benefits.

If your full retirement age is older than 65 (that is, you were born after 1937), you still will be able to take your benefits at age 62, but the reduction in your benefit amount will be greater than it is for people who were born before 1938.

Here's how it works if your full retirement age is 67.

·         If you start your retirement benefits at age 62, your monthly benefit amount is reduced by about 30 percent. The reduction for starting benefits at age

• • 63 is about 25 percent;

  • 64 is about 20 percent;

  • 65 is about 13.3 percent; and

  • 66 is about 6.7 percent.

·         If you start receiving spouse's benefits at age 62, your monthly benefit amount is reduced to about 32.5 percent of the amount your spouse would receive if his or her benefits started at full retirement age. (The reduction is about 67.5 percent.) The reduction for starting benefits as a spouse at age

• • 63 is about 65 percent;

  • 64 is about 62.5 percent;

  • 65 is about 58.3 percent;

  • 66 is about 54.2 percent; and

  • 67 is 50 percent (the maximum benefit amount).

The earliest you can start receiving Social Security retirement benefits will remain age 62. 

Note: If you delay your retirement benefits until after full retirement age, you also may be eligible for delayed retirement credits that would increase your monthly benefit. If you decide to delay your retirement, be sure to

sign up for Medicare at age 65.

In some circumstances, medical insurance costs more if you delay applying for it.

Go to; http://www.ssa.gov/retire2/retirechart.htm

2. Should You Take Social Security At Age 62?

Wondering if you should start taking Social Security at age 62? It's only natural to ask this question. After all, age 62 is the earliest age you can begin drawing on Social Security benefits, and like many people, you are probably inclined to start drawing benefits as soon as you can. This article lays out a detailed analysis of different claiming ages and the cumulative results; 62 isn't always as good as you may think.

3. Earning More Than The Social Security Earnings Limit Can Reduce Your Benefits

If you take Social Security benefits before full retirement age, and you earn income in excess of the annual earnings limit, your Social Security benefit will be reduced. (Keep in mind, investment income does not count toward the annual earnings limit; the only income that counts is income you earn by working.) You'll find details on how the earnings reduction works in this article.

4. Taxes On Social Security Benefits

If you have sources of income in addition to Social Security, then you may have to pay taxes on your Social Security benefits. Those additional sources of income include items such as wages, self employment income, interest and dividends, or pension income. There is a formula that is used that takes all of this into account to determine how much of your Social Security may be subject to income taxes. Find details at the link above.

5. Key Things to Know About The Social Security Spouse Benefit

TGA Capital Management Social Security Planner

This is a powerful program this is designed to help you make better Social Security decisions.  None of us can predict the future, but we can make choices that will hold up better in different economic situations that may be part of our life in retirement.  If married, the program has the option for the primary wage earner to “file and suspend” Social Security payments so the other spouse can get spousal benefits earlier.  You only have to enter the “full-retirement-age” (about age 66) amount for Social Security.  The program automatically calculates the spousal amounts and values for all other ages. 

Here are some things TGA Capital Management can do for you:

 ○ Compare benefits for starting Social Security at different ages for each spouse.○ See if you have enough savings to delay the start of Social Security payments.

○ See how different retirement ages affect your decision when to start Social Security.

○ Compare the effects from different returns, inflation and tax rates.

○ See whether the “file and suspend” strategy will improve your situation.

○ If you believe that your spending will increase at a higher (or lower) rate than the  CPI  adjustment to Social Security, you can try different percentage increments.

○ Also, you can chose between using the common inflation-adjusted retirement spending for planning or planning based on making a new plan each year using the previous year’s investment balance and a new life-expectancy.

Even for the typically affluent clients of financial advisers, informed decisions about how and when to claim Social Security benefits can mean thousands of extra dollars a year, and tens of thousands of dollars over a lifetime. Are you prepared to advise clients on this crucial decision?

Although there has been a growing awareness of the value of waiting until later in life, when benefit levels are higher, the majority of retirees still claim benefits as early as they can, at 62. But just because they can doesn't mean that they should, particularly if they plan to continue working, as so many boomers now expect to do.

Claiming benefits before the normal retirement age of 66 means that earnings will be subject to an annual cap (currently $14,640). Benefits are reduced by $1 for every $2 earned over that.

Once beneficiaries turn 66, the earnings limit disappears.

Married couples have the most flexibility when it comes to Social Security claiming strategies. In some cases, it may make sense for the lower-earning spouse — usually the wife — to claim benefits early, even though it means her retirement benefits will be permanently reduced.

But as long as the higher-earning spouse — usually the husband — waits until normal retirement age or later, he not only will lock in a bigger retirement benefit, but it will translate into a larger survivor benefit for his wife should he die first. Even though her retirement benefits were reduced permanently because she claimed benefits early, her survivor benefits won't be affected as long as she is at least normal retirement age at the time that she begins collecting them.

Locking in the biggest survivor benefit — 100% of what the deceased spouse received during his or her lifetime — should be the main goal of most married couples.

Delayed retirement credits are worth 8% per year for every year you put off collecting benefit from 66 to 70. But that doesn't mean you have to forgo all benefits until 70.

One clever strategy allows you to collect some money now and more later.

Let's say that the wife begins collecting her retirement benefit at 62, based on her own work record. If she will be entitled to $1,600 per month at her full retirement age of 66, her benefit at 62 will be reduced permanently by 25% to $1,200 per month.

Assume that the husband's benefit is worth $2,000 at 66, but he plans to wait until 70 to collect when it will be $2,640, providing a larger base for future cost-of-living adjustments. Once he reaches 66, he can “restrict his claim to spousal benefits only” and collect half of his wife's full benefit each month while his own benefit continues to grow at 8% per year until he is 70.

That boosts the couple's income by $9,600 per year. That extra income probably is something the couple wouldn't know about without the help of a trusted adviser like you.

Last summer, Social Security Timing, a web-based advice tool, surveyed more than 500 married couples between 60 and 66 regarding their knowledge of Social Security-claiming strategies. Although 27% knew that the size of their monthly benefit was based on the age when they begin collecting, more than 70% weren't aware of unusual claiming strategies such as the “claim now and claim more later” strategy described above.

What better opportunity for an adviser to than provide this much-needed information?

But Social Security rules are complex.

For example, different rules apply to clients who receive federal and state pensions, including some public school teachers, substantially reducing Social Security benefits to those workers and their spouses. And there are special rules for divorced and widowed beneficiaries.

Before you contemplate your benefits, make sure you understand the rules. To get the information that you need, TGA Capital Management can provide free Social Security claiming decision tool and is a good start, or call the advisory to discuss your planning. .

I can be reached at; mgreen@tgacapitalmanagement.com  or call for a free preliminary consultation.

I can be reached at 1-508-224-9646.

This is not a solicitation nor recommendation to buy or sell a securities nor to imply any tax or legal advice, always seek a registered investment advisor to attain your risk/averse attitude and investment suitability before investing. All information is considered accurate and reliable, however, due to changing market, economic, taxation, institutional, and other pertinent potential cycles and variations, future results cannot be guaranteed by past performance and should be onitored on a continual periodic systematic basis to provide current advisory recommendations that meets the client short-term potential deviations and management disciplined style, while advisory provides solely long-term recommendations.