Deciding how and when to file for your Social Security, retirement income benefits can be one of the most important decisions that you make with regard to your financial future. Depending on what you choose to do, though, you could leave five- or even six-figures on the table. So, it is essential that you do not make Social Security claiming mistakes.
These blunders can include:
- Filing earlier than necessary – especially if you do not need the income
- Triggering taxes on your Social Security benefits
- Not maximizing survivor benefits
For those who are qualified for Social Security, retirement benefits can be started as early as age 62. But if you go this route and file before you have reached your full retirement age, the dollar amount of the income you receive will be permanently reduced.
Social Security Full Retirement Age
| Year | Rate | Year | Rate |
|---|---|---|---|
| 2018-2022 | 37 | 1950 | 84.36 |
| 2013-2017 | 39.6 | 1948-1949 | 82.13 |
| 2003-2012 | 35 | 1946-1947 | 86.45 |
| 2002 | 38.6 | 1944-1945 | 94 |
| 2001 | 39.1 | 1942-1943 | 88 |
| 1993-2000 | 39.6 | 1941 | 81 |
| 1991-1992 | 31 | 1940 | 81.1 |
| 1988-1990 | 28 | 1936-1939 | 79 |
| 1987 | 38.5 | 1932-1935 | 63 |
| 1982-1986 | 50 | 1930-1931 | 25 |
| 1981 | 69.125 | 1929 | 24 |
| 1971-1980 | 70 | 1925-1928 | 25 |
| 1970 | 71.75 | 1924 | 46 |
| 1969 | 77 | 1923 | 43.5 |
| 1968 | 75.25 | 1922 | 58 |
| 1965-1967 | 70 | 1919-1921 | 73 |
| 1964 | 77 | 1918 | 77 |
| 1954-1963 | 91 | 1917 | 67 |
| 1952-1953 | 92 | 1916 | 15 |
| 1951 | 91 | 1913-1915 | 7 |
Source: Social Security Administration
If you file for Social Security before your full retirement age, and you also continue to generate income from other sources, it is possible that up to 85% of your income from Social Security will be taxable.
For instance, in 2021, if you file your federal income tax return as an individual, and your combined income is:
- Between $25,000 and $34,000, you may have to pay income tax on up to 50% of your benefits
- More than $34,000, then up to 85% of your Social Security benefits may be subject to federal income tax
If you instead file a joint income tax return, and you and your spouse have combined income that is:
- Between $32,000 and $44,000, you may incur federal income tax on up to 50% of your Social Security retirement benefits
- More than $44,000, then up to 85% of your benefits could be taxable
It is also important to pay attention to survivor benefits if you become a widow or widower. While nobody wants to think about this part of financial planning, there are ways to maximize the income you receive from Social Security, even in the event of the unexpected.
How to Fill in the “Gaps” in Your Retirement Income
One way that many people fill in the gaps in income from Social Security, pensions, and other sources like personal savings and investments, is by purchasing an annuity. These financial vehicles are designed for paying out income in return for one or more contributions.
There are typically several different income payouts that you can choose from with an annuity, such as payments for a set period of time – like 10 or 20 years – or lifetime income that will continue for the remainder of your lifetime, no matter how long that may be.
Is an Annuity a Good Option for You?
There are many different ways to file for Social Security. Because everyone’s needs and goals can differ, though, there is no single Social Security filing strategy that will work for all retirees. With that in mind, it is recommended that you talk with a retirement income specialist who can assist you with coordinating your income sources and/or filling in any “gaps” you may have between your expenses and incoming cash flow.
At Annuity Gator, we specialize in helping people generate guaranteed retirement income – and we can assist you with creating a plan that works for you. So, feel free to reach out to us and set up a time to chat.
You can reach us by phone at (888) 440-2468 and via email by going to our secure online contact form. Chats by phone or online are available. We look forward to meeting you.
