Your common Social Security questions answered

For those in their next life stage nearing retirement, it’s common to have questions and concerns about lifestyle changes and ensuring there are enough savings to last throughout retirement. By planning and considering different options, retirees can help set themselves up for success during their golden years. An important part of this planning process is understanding Social Security and how that income source fits into an overall financial strategy. Here are the answers to some common questions about Social Security and you may want to keep in mind when determining a plan for the future.

What is the full retirement age for Social Security?

A person’s full retirement age¹ is based on their birth year and indicates when they can start receiving Social Security benefits. While you can start receiving these retirement benefits as early as age 62, the payment amount will be reduced by a percentage for each month before your full retirement age. Those born on January 1st should refer to the previous year.

If a retiree chooses to delay their Social Security benefits until after full retirement age, they can increase their monthly benefit through delayed retirement credits until they reach age 70.

What is the timeline for a Social Security application?

The timeline for a Social Security application can vary depending on different factors. It’s a good idea to review and consider applying within a timeframe close to when you’d like to receive this income. This can help prevent a gap between the income received from employment and the income received from Social Security. The Social Security Administration¹ (SSA) recommends using their online application to apply up to four months before you want to start receiving benefits.

The documents ¹ needed to apply for Social Security may include:

• Social Security card or a record of the number
• Original birth certificate
• If a person is not born in the U.S., they will need proof of U.S. citizenship or lawful alien status
•  A copy of U.S. military service paper(s) if you served before 1968
• A copy of W-2 form(s) and/or self-employment tax return for last year

After applying, the SSA will review it to ensure that all necessary information is provided. They may request additional details if there are any missing documents or information. A notification will be sent in the mail regarding the SSA's decision on an application, and if approved, benefit payments will be paid according to the schedule determined by the SSA.

How much in Social Security benefits will I receive?

How much a person receives in Social Security benefits depends on their age and their earnings history. For example, someone who waits to claim Social Security benefits until their full retirement age of 67 will likely have a higher payment than someone who applies at 62. The SSA quick calculator² can provide an estimate of a person’s benefit amount based on a few factors. Each year a person works beyond their full retirement age is another year of earnings that goes on their Social Security record. This can equate to higher benefits when retirement does arrive.

However, even with a strategy to maximize Social Security benefits, it may not be enough to cover a desired retirement lifestyle or financial goals for the future. When in the early stages of retirement planning, it might be a good idea to consider your career trajectory to determine peak earning potential for future Social Security eligibility. It’s also beneficial to explore ways to supplement a retirement plan with dependable sources of income, like annuities, to help increase the funds available in retirement.

Questions about Social Security retirement planning

With a basic idea of Social Security and the various factors determining this portion of retirement income, you may want to start thinking strategically about what retirement looks like and how your future self would like to spend the next chapter.

How many years does Social Security take into account?

According to SSA, to be eligible for retirement benefits, a person needs to work at least 10 years. Benefit amounts are commonly calculated using average indexed monthly earnings, which summarize up to 35 years of a worker’s indexed earnings. By thinking ahead, a worker may be able to factor in a future promotion or pay raise to determine if they can delay retirement beyond their full retirement age and boost the amount of Social Security benefits they’ll receive.

When can a spouse collect Social Security benefits?

Some family members may also be eligible for benefits for those receiving Social Security benefits. This includes a spouse who is 62 years or older. Key things to know about spousal benefits include:

• Spouses who never worked or have lower earnings qualify for up to half of a retired worker’s full benefits.
• If a person is eligible for their own retirement benefits and a spouse’s benefits, the SSA pays their own benefits first.
• If spousal benefits are higher than your own, you’ll receive a combination of benefits that equal the higher spouse’s benefit.

Married couples should plan strategically and consider working with a financial professional to determine the most effective retirement timeline and ways they can receive the maximum Social Security benefit allowed.

Do retirement account withdrawals count as income for Social Security?

Many retirees may find that they can’t rely solely on Social Security benefits during retirement. It’s a good idea to consider multiple sources of income built into a financial strategy. Thankfully, withdrawals from a 401(k), pension plan, or annuity are not considered when determining Social Security income, so choosing these options can only add to your retirement earnings.

How to supplement Social Security

On average, Social Security will replace around 40% of a person's pre-retirement earnings.³ Since these benefits are not meant to be the only source of retirement income, building a diversified retirement strategy is essential to a more financially secure future. Adding an annuity to a retirement income plan could be one option for bringing growth potential and a guaranteed income stream to retirement.

There are a variety of annuities to fit different needs, whether someone is looking to grow their retirement savings, turn their nest egg into an income stream, or build their assets to give to their loved ones. Typically, you can choose between a lump sum payment or regular payouts throughout retirement. In looking specifically at a fixed index annuity, this option balances growth potential, and protection from market risk, and some can provide guaranteed income for the rest of a retiree’s life. Discussing personal goals with a financial professional and how to build an income plan that supplements Social Security can ensure both planned and unexpected expenses are covered and a financial future remains protected.

1. The United States Social Security Administration | SSA, https://www.ssa.gov/

2. Social Security Quick Calculator, https://www.ssa.gov/OACT/quickcalc/

3. Social Security Administration, Retirement Ready Fact Sheet for Workers Ages 61 – 69, February, 2023 https://www.ssa.gov/myaccount/assets/materials/workers-61-69.pdf

The term financial professional is not intended to imply engagement in an advisory business in which compensation is not related to sales. Financial professionals that are insurance licensed will be paid a commission on the sale of an insurance product.

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