10 Common Social Security Questions Answered
On this episode of A Wiser Retirement Podcast, Casey Smith and Brad Lyons, CFP® answer and explain some of the most common Social Security questions. They also talk about current market performance, and why you should stay invested long term.
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May 2022 Market Performance
People have started getting nervous about the stock market, and have even questioned pulling out of the market all together. You can’t make decisions about the marked based on how you feel, but rather based on what your needs are, and what your investment objectives are. You don’t want to have all of your money in the market, because when you need money, you’d then have to go to your portfolio and liquidate. It is smart to have reserves outside of your portfolio, so when times like this happen, you don’t have to liquidate your portfolio in order to live. A large part of this is financial planning. It has to come first, and then investing comes second. Once you take the time to build these buffers in, you won’t have to touch the money in your investment portfolio.
10 Common Social Security Questions:
1. What is Social Security?
Social Security was established in 1935 to provide retirement income for certain US workers. It was later expanded to cover the entire workforce. It was designed to help people from falling into poverty when they reached retirement age. It is likely one of the most successful government programs ever.
2. At what age am I eligible for Social Security?
For those born 1960 or after, you are eligible at age 67. For people born between 1943-1954, you are eligible at age 66. You could also take Social Security sooner, starting at age 62, but if you take it early you will permanently reduce your benefits.
3. How is Social Security eligibility determined?
For a worker, it is based on the number of credits you have. A credit is equal to an amount of money that is earned over a period of time in a year. In order to have full retirement benefit, you need to have 40 credits over your working lifetime. Once you have those 40 credits, you are eligible for your full Social Security benefit.
4. How do they calculate how much you get?
It’s based on a formula that averages the income from the 35 highest earning years. Click here to use the Social Security estimator.
5. Can we still get Social Security while we’re working?
If you are of retirement age (let’s say 67 or older), you can take social security and your employment income and there will be no reduction in Social Security. If you take Social Security early at age 62, but you are still working, it gets reduced $1 for every $2 earned. For most people, it doesn’t make sense to take Social Security while you’re still working, and is better to just delay taking it.
6. How does the spousal benefit work with Social Security?
The spousal benefit has been around since Social Security was enacted into law. In a single household earning situation, the non-earning spouse can get a portion of the working spouses benefit, claimed for themselves in retirement.
7. Do we owe taxes on Social Security when we receive it?
Yes, for most retirees, you will owe taxes on it. How much it is taxed is based on factors like if you are married and your income level.
8. How do you apply for benefits?
You apply starting three months before you actually retire. You can apply at a Social Security Office, by phone, or online.
9. How does the Social Security System work?
Many people thinks Social Security will be dead by 2033, which isn’ the case. About 76% of Social Security’s need is covered by current tax payers. The rest of that need is covered by excess funds over the years.
10. Is Social Security in trouble?
Politically, Social Security issues are not something people are jumping to solve. Currently Social Security can pay its full benefits through 2033, but after that only 76% would be available. Some ways to solve this issue include eliminating salary cap or changing the retirement age.
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1:15 May 2022 Market Performance
16:53 What is Social Security?
19:07 When are you eligible for Social Security?
22:07 How is Social Security eligibility determined?
25:20 How do they calculate how much you get?
26:08 Can we still get Social Security while we’re working?
27:52 How does the spousal benefit work with Social Security?
29:30 Do we owe taxes on Social Security when we receive it?
30:20 How do you apply for benefits?
31:55 How does the Social Security System work?
33:42 Is Social Security in trouble?
Learn more about Casey Smith and connect with him on Twitter.
Learn more about Brad Lyons.
Learn more about Matthews Barnett.
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