Retirement Planning: Understanding Social Security Benefits

Social secruityNavigating the issue of Social Security benefits (SSB) can be a difficult process for individuals nearing the age of retirement.

Generally it is advised to wait as long as possible before taking SSB, however it is sometimes necessary for an individual to begin collecting these payments early. If the individual is able to continue working while collecting social security benefits it may be possible to increase the overall profit.

For those who collect SSB early
It is possible that the benefits will be decreased due to working, however these lost benefits can be recouped when full retirement age is reached.

  • Individuals can receive an earned income of no greater than $15,720 (in 2015), otherwise $1 in SSB will be deducted for every $2 earned over the threshold.
  • Individuals who will reach full retirement age within the year can earn up to $41,880 (in 2015); for any amount exceeding these earnings, SSB will deduct $1 for each $3 earned until the full retirement age is reached.
  • If an individual’s benefits were reduced on the basis of earnings the government will recalculate benefit amounts after the individual reaches the full retirement age; typically the individual will receive a period of increased monthly benefits to make up for the reductions.

It is important to note that continuing to work can potentially increase the total benefit amount, Social Security will look at an individual’s highest 35 years of annual income to compute the benefits.

For more information, or to learn more about how your work can affect your eligibility for Social Security, contact Newman Elder Law.

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