Answers to the Most Frequently Asked Social Security Questions
According to data, about 90% of retirees in America get Social Security benefits. Of this percentage, 50% of the married retired couples as well as 71% of single retirees depend on Social Security for at least 50% of their monthly income. And if you are about to retire and join the other 62 million Americans who get Social Security Retirement benefits, then it’s a good idea for you to understand the Social Security System. Here are the answers to four of the most frequently asked Social Security questions.
Most Frequently Asked Social Security Questions
1. What is my Social Security benefit amount?
You Social Security benefits amount is arrived at using a formula that calculates how much you should get when you arrive at your Full Retirement Age (FRA). Your FRA is decided based on the year of your birth. For example, for people born in 1960, the FRA would be 67 years. Now, once the FRA is decided, then the formula calculates your monthly benefits based on the average of your highest 35 years’ earnings. So, if you worked for, say, 40 years, the formula will pick 35 years where your earnings were highest and use their average to calculate your benefit amount.
Now, here’s the catch, the later you apply for your Social Security benefits, the higher your monthly payments will be. You may apply for Social Security Retirement benefits once you turn 62. However, this means, you won’t get the total amount that you could get if you waited till you reached your FRA. And if you wait till you are 70, you’ll get a little extra.
To find out how much your Social Security payouts could be, log onto My Social Security.
2. How can I apply for Social Security benefits?
There are many way to apply for Social Security benefits.
- Apply online
- Telephonically by calling their toll-free hotline 1-800-772-1213
- Make an appointment with the Social Security Administration Office and apply in person
3. When should I apply for Social Security benefits?
You may apply for Social Security Retirement benefits once you reach 69 year and 9 months of age. However, don’t apply until you actually plan to retire. So, if you want to retire at 70, then wait till you’re 69 years and 9 months old before applying.
4. Do I need to pay taxes on my Social Security benefits?
Yes, it is probable that you mayneed to pay a certain amount of tax on your Social Security Benefits. However, the first thing that needs to be understood is the meaning of the term “income” in relation to Social Security benefits.
“Income” is not necessarily your complete income. Rather, “income” here is a combination of your non-Social Security income plus half your Social Security benefits plus some (not all) tax-free income such as bonds.
After you calculate your “income”, then the following may apply:
- Filing an individual tax return of an income between $25,000 and $34,000 may mean a tax cut of 50% of your Social Security benefits.
- Filing a joint tax return of an income between $32,000 and $44,000 may mean a tax cut of 50% of your Social Security benefits.
- Filing an individual tax return of an income of $34,000 or more could mean a tax cut of up to 85% of your Social Security benefits.
- Filing a joint tax return of an income of $44,000 or more could mean a tax cut of up to 85% of your Social Security benefits.
People with lower incomes may be exempt from income tax deductions.