Social Security will provide a predictable portion of your income in retirement, so you’re counting on those benefits being available when you’re ready to claim them. However, the claims process is actually much more complicated than many people believe, giving you plenty of opportunities to make minor (or occasionally major) mistakes. Before you set your target retirement date and file your claim for Social Security, make sure you can answer these questions.
What is your full retirement age? Over the years, policy changes have raised the full retirement age, according to your birth date. You need to have this information so that you know exactly when you can claim your full scheduled benefits.
How many work credits do you have? Did you know that everyone is not automatically eligible for Social Security? You actually need to accumulate 40 work credits over your lifetime, before you can claim benefits.
Having said that, most people will be able to accumulate these credits. Currently, workers receive one credit for every $1,320 of taxable earnings each year, up to four credits per year. So as you can see, most people will easily accumulate 40 credits. But because the rules regarding credits have changed over the years, make sure you have indeed accumulated 40 if you experienced many non-working years for any reason.
Have you asked for a copy of your earnings record? Social Security calculates benefits according to your 35 highest-earning years. But since mistakes can be made, you should check your earnings record to be sure that Social Security has the right numbers.
Are you eligible for spousal benefits? Sometimes the spousal benefit is actually greater than your own (because your spouse, or former spouse if you were married at at least ten years, earned more money). In some cases it’s smart to claim the spousal benefit rather than your own.
Will your benefits be taxed? You don’t want to receive any unpleasant surprises, especially regarding taxes! If you earn above a certain threshold each year, your Social Security benefits can be taxed in some cases.
These are just some of the major questions you should ask about Social Security before retiring. Make sure to work closely with us as your expected retirement date approaches, so that we can help you correctly estimate your benefit amounts and make an income plan for the future.