Weather Forecast


Social Security strategies

More than 55 million Americans receive Social Security benefits, and about one-quarter of retirees depend on Social Security as their sole source of income. Social Security payments are clearly essential to many people, which is why it's so important to understand what to expect from your own benefits. The Minnesota Society of Certified Public Accountants explains some key points about the program.

Know when you qualify: The age at which one qualifies for full Social Security retirement benefits has been creeping up from the traditional 65. Those born between 1943 and 1954 must be age 66 to qualify, and those born in 1960 or later must be 67; for those born between 1955 and 1959, the retirement age increases incrementally from 66 to 67.

Consider your credits: Not all workers automatically receive Social Security benefits when they reach full retirement age. When Social Security taxes are deducted from your pay, you receive credits that add up over time to qualify you for benefits. Those born in 1929 or later need a minimum of 40 credits and 10 years of work to qualify.

If you stop and start working at different times in your life, your credits will continue to accumulate.

In addition, the higher your earnings over time, the greater the benefit you will receive (until you reach the benefit maximum).

As a result, if you stopped working for long periods or if your earnings were relatively low at various points in your career, it may be in your best interest to work longer -- either full or part-time -- in order to pump up your total lifetime earnings. Your certified public accountant can help you determine the best choice for you.

Make informed decisions about your retirement date: Once you confirm when you qualify for benefits, you should give some thought to whether that's actually the best time for you to begin receiving them.

You may qualify to begin taking Social Security retirement benefits as early as age 62, but they will be lower than the full benefits you'll receive if you keep working to your predetermined retirement age.

But keep in mind, you will receive a higher benefit if you continue working until at least age 70. The Social Security Administration website illustrates that the difference in what you receive can be significant.

Imagine you qualify to receive $1,000 a month if you retire at your predetermined retirement age, which is, let's say, 66.

If you retire at age 62 instead, there will be a permanent reduction in your benefit to $750 a month. On the other hand, if you delay retirement until age 70, you're monthly benefit will jump to $1,320. So you may need to think about the advantages and disadvantages of taking a smaller amount sooner or holding out for more later.

Considerations may include your employment situation, your family needs and your health.

Remember that your CPA can help you work through the numbers and find the best answers.

Sign up for Medicare by 65: No matter when you start receiving Social Security benefits, it's important to sign up for Medicare at least three months before you turn 65, even if you plan to keep working.

If you do not, you may face delays in or higher costs for coverage. More information is available on the Social Security website.