When planning for retirement, many investors rely on their Social Security retirement benefits as the bedrock of their retirement plan. That’s a perfectly reasonable approach, your benefits will accrue and ultimately be available to you regardless of how much you’ve set aside in a 401(k) or retirement plan.
There are, however, highly individual factors that should influence how you decide to draw on your Social Security retirement benefits. Here are four tips to help you stay on top of Social security plus a handful of interesting facts and costly mistakes to avoid.
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#1: Know your Social Security Facts
Take this quiz from AARP to see how Social Security-savvy you are!
#2: Social Security Retirement Benefits Tips for Couples
- If your incomes are similar and your life expectancy is long, consider delaying your claims to maximize your lifetime Social Security retirement benefits
- If your incomes are vastly different, determine if your spousal benefit is better than claiming your own
- If your life expectancies are shorter than average, you may want to consider claiming earlier
#3: Pay Attention to Social Security Law Changes
For example, the payroll tax earnings cap went up from $128,400 in 2018 to $132,900 for 2019. That means, once you’ve reached that earnings level, your Social Security tax stops for that year.
#4: Will your State Tax your Social Security Retirement Benefits?
These 13 states do: Colorado, Connecticut, Kansas, Minnesota, Missouri, Montana, Nebraska, New Mexico, North Dakota, Rhode Island, Utah, Vermont and West Virginia.
Fun Facts about Social Security!
- The first monthly Social Security check was sent out in 1940 to Miss Ida May Fuller of Brattleboro, Vermont. And she received the grand sum of $22.54 (that adds up to about $414 today)
- When you die, so does your Social Security number
- Last year, 67.9 million people received some type of Social Security retirement benefits
- In 2018, 5.6 million people began receiving benefits
- Women comprise 55% of adult Social Security beneficiaries
- Annual Social Security retirement benefits are equal to the size of Mexico’s economy—around a trillion dollars
- If you decided you took your benefits too early, you can undo your claim within the first 12 months of enrolling … if you pay back every cent you’ve received from Social Security
- Social Security is not broke yet! Last year, the program ran a $2.89 trillion surplus, but all other things being equal, benefits may have to be decreased by some 25% by 2034
92% of workers currently in their 40s say they expect to continue working part-time in retirement, according to a survey from TD Ameritrade, and 52% of those in their 70s are still working in at least some capacity.
A survey conducted by Nationwide found a full 92% of Americans couldn’t identify the factors that would give them the maximum Social Security benefits.
Costly Social Security Mistakes
- Receiving benefits too early
- Remarrying without understanding the consequences
- Not knowing your spousal benefits
- Failure to double-check you Social Security earnings
When you’re still in the workforce, there’s little you can do to influence your Social Security retirement benefits (other than continuing to work). But as you approach retirement age, a little planning around when to begin drawing benefits and a greater understanding of spousal benefits can make a world of difference.