4 Questions to Answer Before Taking Social Security
For many older people, social security benefits are their main source of income. For this reason social security is an important part of your retirement, and you should carefully consider when or how to accept those benefits. Below are some vital questions you should ask yourself before you accept social security. If you need more information and are in or near the areas of Concord, Walnut Creek, and Antioch, The Law Offices of Joel A. Harris is here to help!
1. When Should I File for Social Security Benefits?
There is really no specific answer to this as it depends on a person’s age, health, and finances. In general, though, the earliest age to file is 62 and filing early may not be such a bad idea. This accounts for why so many people retire early but simultaneously must rely on these benefits to be comfortable. Some people choose to work until 66 which can increase the social security payment, but many do not find the amount of extra work worthy of the benefits they receive. For this reason it is purely up to each person if they can afford to retire, how much money they need, and whether or not they are healthy enough or willing to continue working. If you choose to delay claiming your benefits until age 70, payments will increase by about 8 percent for each year you delay claiming Social Security up until age 70. After age 70, there is no additional benefit for waiting to sign up for Social Security. Finally if you have dependent children under age 19, you may be able to secure additional Social Security payments for them that could be worth up to one half of your full retirement benefit (certain limits may apply). Your CPA or financial advisor can help you make this important decision. If you do not have a good CPA or advisor, please contact us and we will be happy to refer you to someone we work with in your area.
2. How’s Your Health?
This is important to think about considering the average life expectancy is 79 years (I don’t think that is correct). For people who are not in the best of health, it may be best to start accepting benefits early and use them as long as possible. If you are otherwise healthy you may decide to continue working in order to keep your benefits waiting and use them only when absolutely necessary. If you expect to live past the average life expectancy, your best bet would be to retire later in order to get the most out of the program.
3. How Do I Receive my Benefits?
The AARP website gives a good answer to this question. Many people are confused about whether or not you can claim it online, in person, or through your bank account (direct deposit). In 2013, Social Security stopped mailing out their checks in order to slash delivery expenses. For this reason most people have their monthly payment directly deposited into their bank account. This is easy to set up and will save a lot of time. Another option is to get a debit card, where the benefits can be deposited and used like a credit card.
4. Can I Get Higher Benefits?
In order to get the most bang for your buck, you may be interested in additional or alternative benefits to your social security. This can be helpful to people who stopped paid work to instead volunteer or care for ailing family members. For example, those who were married for over 10 years may be eligible to some of their ex-spouse’s benefits. Survivor’s of a deceased spouse can elect to take the deceased’s larger social security benefit. Just be careful if you have a part-time job, because if those earnings, plus nontaxable interest and half of your Social Security benefit equals more than $25,000 for individuals or $32,000 for couples, up to 50 percent of your Social Security benefit could be taxable!
Lastly, we strongly encourage you to Create a My Social Security account and download your Social Security statement annually. This will allow you to check that your earnings history and Social Security taxes paid have been recorded correctly by the Social Security Administration. You must do this to ensure you are getting credit for the taxes you’re paying into the system.
Are You Worried about Your End of Life Plan?
If you are not prepared with a current estate plan then your family could be vulnerable to higher tax bills, extensive legal fees, and familial conflicts. To avoid those obstacles you should visit an Estate Planning Attorney to get professional help, and create a plan that well suits your goals.
The Law Offices of Joel A Harris are located in the cities of Concord, Walnut Creek, and Antioch, California. We have worked for over 25 years giving the best guidance our clients need to protect their assets. Have a question about your planning your estate? Feel free to schedule a sit-down meeting where we are happy to patiently answer every question you may have. For your free consultation reach out to us at (925) 757-4605.