Misunderstandings About Social Security Benefits

Social security benefits is a hot topic for both the young and the old. As is the case with any frequently discussed issue, there is a lot of misinformation available. Whether you plan to collect benefits in the near future or you are concerned that there will not be anything for you to collect by the time you reach retirement age, here are five common misunderstandings about social security.

1. You should starting taking benefits as soon as possible.

Although this sounds good on the surface and you may be eligible to start collecting when you turn 62, your benefit will be permanently reduced. It is best to wait until what the Social Security Administration refers to as your “full retirement age,” which is 66 if you were born between 1943 and 1954, in order to get a larger monthly benefit. Plus, benefits increase by eight percent for every year you wait to collect between your FRA and age 70.

2. If your spouse earns more than you do, you should take the spousal benefit.

This benefit can be a real income boost for a low-earning or nonworking spouse. However, the amount you receive is half of the amount of the higher-earning partner’s benefit. Once you file for social security, you will automatically receive the larger of either your own benefit or the spousal benefit.

3. If you are disabled, you can collect social security benefits and SSDI at the same time.

Unfortunately, you are not allowed to “double dip.” If you are currently collecting SSDI benefits, you will be automatically switched to your social security retirement benefit once you reach your full retirement age. You cannot receive both benefits.

4. Social security is only for the elderly.

An estimated 36 million workers who have retired receive social security benefits, while 2.9 million children and spouses of workers who have retired receive these benefits. Another 2.1 million spouses and children of disabled workers receive benefits as well as 8.7 million disabled workers. A total of 3.3 million children 18 years of age or younger receive social security. In addition, the SSA paid benefits to 6.3 million survivors of deceased workers in 2013, including 2 million children.

5. Social security is ending.

The SSA reports that it had a surplus in 2012 and anticipates surpluses through 2020. Currently, benefits will be paid until 2035, and financial experts hope that changes will be made to increase revenue before then. However, even if the SSA does not make any changes, the current rates at which payroll taxes are taken will likely cover roughly 75 percent of all future benefits.

6. Do not worry about IRA distributions.

Unfortunately, many retirees fail to calculate the impact that required IRA distributions will have on the taxation of Social Security benefits. These folks could find themselves blindsided as up to 85 percent of a client’s SS benefits could be subject to federal income taxes depending on that person’s modified adjusted gross income.

Whether you have reached retirement age or you are young and are looking toward the future, it is important to have a complete understanding of how social security works to protect yourself against any unfortunate surprises in the future. Solid planning, hard work, and smart decisions can help to ensure that you and your family are financially sound once you reach retirement age.

The law office of Andrew M. Lamkin, PC stands ready to help you with your Social Security needs, questions, and concerns. Contact them today at 516-605-0625 to get the help you need!

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