What you should know before taking Social Security

How do you find out how much Social Security you’ll receive?

How much Social Security you’ll receive is determined by your highest 35 years of earnings.¹ You can estimate your personalized benefits and see the impact of starting at different ages by creating an account at ssa.gov.

Is it better to take Social Security at age 62 or 67?

The answer depends on your financial situation. Once you reach full retirement age (FRA), which varies based on the year you were born, you’re entitled to your full benefit.

You can apply for your benefit as early as age 62, but your payment is reduced because you’ll receive four to five more years’ worth of income.³ On the other hand, you can increase your payment amount by delaying up to age 70 (there’s no benefit to waiting beyond age 70).⁴ Whether you start sooner or later, your payment gets locked in, so be sure of your decision.

Can you keep working and get Social Security?

You can keep working while receiving Social Security, but your payments will be reduced if you haven’t reached full retirement age and you make more than certain thresholds. If your benefit payment is reduced because you’re still working, your benefit will increase to make up for prior reductions when you reach full retirement age.⁵

At what age is Social Security not taxed?

Social Security doesn’t stop getting taxed because you reach a certain age; it depends on how much money you make and your tax filing status. The income that matters is your combined income—50% of your Social Security income, plus 100% of all your other income, including wages, pension income, interest, dividends, and capital gains.⁶

If you’re single and have a combined income greater than $34,000, then 85% of your Social Security income will be taxable income.
 

Are you getting a raise on your Social Security?

Each October, the U.S. Social Security Administration (SSA) determines if a cost-of-living adjustment—a raise—will apply for the following calendar year’s payments based on changes in the Consumer Price Index (CPI)—a way to measure inflation. There’s no guarantee that a change will occur, but if there is, it’ll apply to all 12 payments in the following calendar year. For example, the SSA recently announced a 5.9% increase to all 2022 payments, the largest increase since 1982.⁷
 

How does your decision affect your spouse’s benefit?

Spouses are entitled to the greater of their benefit or 50% of your benefit. If you decide to receive payments before reaching full retirement age, it reduces what your spouse could make. Conversely, if you delay your payment, both your and your spouse’s benefit could be increased.
 

A lot goes into your Social Security decision

There’s a lot to consider when deciding to start your Social Security benefits. By growing your 401(k) or other retirement accounts, you can help reduce your reliance on Social Security and give yourself some flexibility for when you start receiving benefits.

Starting your Social Security benefits is personal to you and your financial situation. But remember, once you submit your application and start getting payments, your decision is final, so consider the impact on your long-term retirement income before you do.
 

1 “Social Security Benefit Amounts,” U.S. Social Security Administration. 2 “Retirement Benefits,” U.S. Social Security Administration, January 2021. 3 “Benefit Reduction for Early Retirement,” U.S. Social Security Administration, 11/25/08. 4 “Delayed Retirement Credits,” U.S. Social Security Administration. 5 “How Work Affects Your Benefits,” U.S. Social Security Administration, 2021. 6 “Don’t forget, Social Security benefits may be taxable,” U.S. Internal Revenue Service, 6/25/20. 7 “Cost-Of-Living Adjustments,” U.S. Social Security Administration.