4 Facts to Understand About Social Security
Social Security remains the largest source of retirement income for many retirees, making it crucial for everyone to grasp its fundamentals, even if you’re not yet eligible.
This week on Better Money, Eric Hogarth, CFP® discusses four essential facts you need to understand about Social Security.
#1. The Importance of Social Security
Whether it’s your entire retirement income or just a portion, Social Security impacts almost every American. Educating yourself on the system can prevent costly mistakes. Remember, some people might not receive benefits, but understanding the system is vital to avoid penalties.
#2. Timing Matters
When you choose to start taking benefits can significantly affect the amount you receive. If you begin collecting early, at age 62, you will receive less money than if you wait until your full retirement age of 66 or 67. Starting early can also lead to withheld benefits if your earnings exceed a certain threshold. However, if you wait until your full retirement age, you can continue working without facing penalties, maximizing your benefits.
#3. Medicare Premiums Impact
Increases in Medicare premiums can eat into your Social Security benefits, even with cost-of-living adjustments. This can be discouraging as rising living costs may offset any increases in benefits. It’s essential to stay mindful of these potential deductions to better plan your retirement finances.
#4. Taxes on Social Security Benefits
Up to 85% of your Social Security benefits might be taxable, depending on your income level. This so-called “cliff tax” means that surpassing a certain income threshold by even $1 could push you into a higher tax bracket, affecting all your benefits. Knowing these numbers and seeking professional advice from your financial advisor can help you navigate these complexities and avoid unexpected tax burdens.
Final Thoughts
Social Security is a vital component of retirement planning, alongside other forms of savings. By understanding these key points and seeking expert advice, you can make informed decisions and optimize your retirement benefits, ensuring a more secure and comfortable future.
Information presented in our podcasts is considered current as of the created date. Over time, some information presented may become stale. We recommend you consult with your Financial Professional before making any changes based on information contained here.
Johnson Brunetti is a marketing name for the businesses of JB Capital and JN Financial.
Investment Advisory Services offered through JB Capital, LLC. Insurance Products offered through JN Financial, LLC.
The guarantees provided by any type of insurance contract are based on the claims-paying ability of the insurance company.
Related Resources
-
Identity Theft: What to Do If Your Identity Is Stolen
In the digital age, the threat of identity theft is at an all-time high. Sophisticated cybercrime tactics and schemes have left us more vulnerable to online scams than ever before. So, what can… -
Estate Planning Must Haves
Estate planning can be a time-consuming and overwhelming process, but it’s a crucial step in securing your family’s financial future and cementing your legacy. By working closely with an estate pl… -
The Road to Retirement – Don’t Go it Alone
Achieving the retirement you’ve always dreamed of often requires careful planning. While the do-it-yourself approach may be difficult to shake, consider the benefits of seeking professional advice… -
What Updates Can We Expect for Social Security in 2025?
A new year means new rules for retirement plans. Let’s start with one of the largest sources of income for millions of retirees: Social Security. What changes can we expect in 2025? Heath Gross… -
Getting It All Together for Retirement
After a long, fulfilling career, the time has come to embrace the next chapter. You may have envisioned the age at which you’d retire since you began working, but it’s important to distinguish bet… -
Key Questions for Planning Your Retirement Income
Replacing your income in retirement is a significant undertaking that raises many important questions and requires careful planning. First and foremost, it’s essential to have a retirement income … -
Health Care Expenses in Retirement
Of all the expenses to expect in retirement, health care often makes up a significant portion of your costs. Monthly premiums, out-of-pocket expenses, and services not covered by Medicare can quic… -
Income Planning 101
You’ve spent the last few decades saving for retirement but are you truly prepared? To help address any concerns or uncertainties you may have, you need an income plan – one that considers every f… -
Frequently Asked Social Security Questions
Almost every American is impacted by Social Security in some way, so it’s no wonder that it’s one of the most frequently asked topics in retirement planning. When and how you start taking benefits… -
Maximizing Your Social Security Income
Social Security can serve as a safety net for many retirees, sometimes acting as a primary source of income. However, the program is highly complex with over 500 ways to claim benefits. Even one o…
