You will remember that not long ago you use to get an annual statement from the Social Security Administration (SSA) listing your earnings’ record as well as future estimated benefit amounts. However, you have not received this recently. Why? Because the SSA has stopped sending these annual statements due to budgetary cuts. In addition to ending the mailing of this statement, the form SSA-7004, "Request for Social Security Statement” is no longer available.
Fortunately, estimates of various Social Security benefits can still be calculated on the SSA website at http://www.ssa.gov. If you click on the “Retirement Planner” link, you will find a lot of very good information addressing most questions regarding Social Security.
BEFORE YOU INITIATE RECEIVING YOUR SOCIAL SECURITY INCOME
If you start your benefits prior to age 66 your check will be reduced each year prior to your “full retirement age” (FRA) — e.g., age 62 it would be a 25% reduction. However, you can still earn up to $14,640 in 2012 before your benefits are further reduced—plus pensions, annuities, investment income, and interest, and veterans and other government or military retirement also do not reduce your Social Security benefit. Fortunately, when you reach your FRA, there is no cap on your earnings regardless of when you began collecting your Social Security. Moreover, if you delay taking your Social Security beyond your FRA, your check will increase by 8% each year that you wait, between ages 66 and 70.
DON'T FORGET TO APPLY FOR MEDICARE AT AGE 65
Even if you decide to put off receiving your Social Security benefits until after age 65 you must, nonetheless, proactively apply for Medicare when you turn 65. If you do not do so, regardless of the reason, you will receive a 10% penalty (added to your Part B premiums) for each 12-month period that you go without applying after becoming eligible. Even worse, this penalty will continue for the rest of your life! The only exception to this harsh financial penalty is if you are covered under an employer's health plan between age 65 and when you begin receiving your Social Security benefits.
ADDITIONAL INFO TO HELP YOU
• A spouse who has little or no earnings history can still receive a monthly check for up to half of the working spouse’s monthly Social Security benefit.
• If a divorce took place more than two years ago, one need not know the earnings history, or even the whereabouts, of the ex-spouse to apply for “spousal” benefits.
• Widowhood affects Social Security benefits.
HOW ARE SOCIAL SECURITY BENEFITS TAXED?
As a single person, 50% of your Social Security income will be taxed when the combination of one-half of your Social Security proceeds plus all other income (pensions, investments, IRA withdrawals, etc.) total more than $25,000 for the year; and when the total is over $34,000, the percentage goes to 85%. Moreover, married couples pay taxes on 50% of the excess above $32,000, and 85% above $44,000. You may want to know that there are some options available that have helped many people eliminate taxes on their Social Security benefits.
IF YOU ARE MARRIED…
If both spouses are receiving Social Security benefits, when the first one dies the smaller of the two checks, regardless of whether it is the husband’s or wife’s, is taken away. If this is a concern to you, you can effectively coordinate and prepare for this contingency. [See the article on this website entitled, “Minimize the Loss of Retirement Income at the First One’s Death”].
CONSULTATION?
To get together for a consultation, in person or by phone, to review your particular circumstances, contact me by phone (800-285-3373) or E-mail me your specific concern to info@CapitalEnhancement.com, and you will receive a speedy reply of possible options you may want to consider.
