5 Things to Know About Social Security

When it comes to something as important as Social Security, it's good to know you're getting as much from it as possible. Here are five key facts to remember:

Your payments will be bigger if you wait until your full retirement age.

You can start taking Social Security payments as soon as you turn 62, but your benefits will be reduced 20 to 30%. That's a big chunk, especially if you expect to spend many years in retirement. You might consider working a bit longer or relying on your retirement savings to help cover your living expenses until you can receive full benefits.

What's Your "Full Retirement Age?"

If you were born in...It's...
1937 or earlier65
193865 + 2 months
193965 + 4 months
194065 + 6 months
194165 + 8 months
194265 + 10 months
1943-195466
195566 + 2 months
195666 + 4 months
195766 + 6 months
195866 + 8 months
195966 + 10 months
1960 or later67

You can work while getting Social Security.

As long as you're 62, you have the option to take Social Security. If you earn more than $13,560 a year between age 62 and your full retirement age, your benefit payments will be temporarily lowered, based on how much you earn. Say you earn $10,000 over the limit. Your benefits would be reduced by $5,000. If you make $20,000 over the limit, they would be reduced by $10,000. (The limit gets updated each year.)

The good news is that you don't actually lose out on those benefits. Instead, your payment amount is recalculated so that you receive more money later on. It's another way working in retirement can help stretch out your income over time. 

Your payments won't start automatically.

The two rules above mean it makes the most sense for you to tell the Social Security Administration when you're ready to start receiving monthly benefits. You can do that over the phone (1-800-772-1213), in person, or through the Social Security online application.

Your benefits could be taxed.

Only a third of Social Security beneficiaries end up paying taxes on their benefits. It all depends on the earnings listed on your income tax return. If you file with more than $25,000 as an individual (or $32,000 jointly), you’ll have to pay federal income taxes on your benefits. The rules for state income taxes vary from state to state.

Your payments can help your family, too.

Let's say your monthly benefits turn out to be three times as much as your spouse's. (It's a common scenario, especially in families where one spouse paused their career to stay home with the kids.) If she waits until her full retirement age to start getting benefits, her payments will be raised so they equal half of yours.

After you die, your spouse will get either your monthly benefit check or hers—whichever is more. And if you have disabled children, kids under age 19, or elderly parents who depend on you for at least half their income, they could receive "survivor benefits."

Read more on the Social Security Administration’s website.

Learn more about our Financial Tools and Resources.

Securities offered by Personal Financial Representatives through Allstate Financial Services, LLC (LSA Securities in LA and PA). Registered Broker-Dealer. Member FINRA and SIPC, Main Office: 2920 South 84th Street, Lincoln, NE 68506, 877-525-5727. Life insurance issued by Allstate Life Insurance Company, Home Office, Northbrook, IL; Lincoln Benefits Life Insurance Company, Lincoln, NE. In New York, Allstate Life Insurance Company of New York, Hauppauge, NY.

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