Decisions about Social Security benefits are among the most important retirees may face. Answers to common questions such as, “When should I file?” or “How much will I receive?” are as unique as the clients asking them.
Financial professionals are in a great position to assist. Also, unpacking the ideas related to concepts such as “the right time to file” can often reveal new opportunities.
Despite the opportunity to help, financial professionals often avoid the topic because they don’t want to get bogged down in the minutia. However, it’s important to remember that it’s not essential to be an expert in every facet of the program to lend a helping hand.
Moreover, there are boundless resources available for questions that are asked to a finer point. The Social Security Administration’s website ssa.gov is one of the best. A quick note for clarity: Social Security is an 83-year-old insurance program designed to support elderly people and their families in the face of poverty.
Here are some fast facts that can help financial professionals better understand Social Security in general and, in turn, help them guide their clients toward more informed decisions.
40 quarters represents the amount of time an individual has to be working to be considered fully insured. Note that this does not mean someone is eligible for the maximum benefit. Benefit amount is determined by calculating a beneficiary’s average indexed monthly earnings (AIME) over their highest 35 years of working history.
62% of beneficiaries rely on Social Security as the major source of income (providing at least 50% of total income).
76% is the amount someone’s benefit can increase if they wait until age 70 when compared to taking benefit as early as possible (age 62).
71% of retired workers take reduced benefits because they elected to file before full retirement age.
8% is the amount someone’s benefit can increase every year (up to age 70) if they wait past full retirement age to file.2
½ of a filer’s primary insurance amount may be available to their spouse as a spousal benefit, even if only the primary filer has earnings history.
1954 is the last year someone can be born before to be eligible for the “file and restrict” strategy.
85% is the maximum portion of someone’s benefit that can be subject to income tax — depending on the filer’s combined income.1
1 “Combined income” is defined by the Social Security Administration as: adjusted gross income plus nontaxable interest plus half of your Social Security benefits.
2 Annual delayed retirement credit percentage varies from 3% to 8% by year of birth
Neither Transamerica nor its agents or representatives may provide tax or legal advice. Anyone to whom this material is promoted, marketed, or recommended should consult with and rely on their own independent tax and legal advisors regarding their particular situation and the concepts presented herein.
Transamerica Resources, Inc. is an Aegon company and is affiliated with various companies which include, but are not limited to, insurance companies and broker dealers. Transamerica Resources, Inc. does not offer insurance products or securities. The information provided is for educational purposes only and should not be construed as insurance, securities, ERISA, tax, legal or financial advice or guidance. Please consult your personal independent advisors for answers to your specific questions.