Joseph Nicholas Wambugu

Top Five Social Security Rules During retirement, millions of retirees depend on Social Security as a source of income. No matter whether you are claiming benefits or planning for your future, here are top five rules that you need to know about Social Security. Rule # 1: Social Security benefit calculation Your service history determines the amount of Social Security benefits you’ll receive. Typically, benefits are calculated using your highest earning in 35 years. So, the more you earn during your career’s peak determines the size of the benefit you collect. If in case you don’t work for the entire period of 35 years, you should consider working for longer to increase your benefit amounts. Assuming you work for only 32 years, you’ll have $0 added to your benefits upon calculation. Even so, replacing this zero figure with a salary means that your benefits increase substantially. Similarly, your benefits will increase accordingly if presently you’re earning more than at the beginning of your career. For instance, a $20,000 income with $120,000 in income will provide a higher income stream for life. Rule # 2: You Must Be 62 Years of Age to File For Social Security Social Security recipients have an eight-year window in which to file for their benefits. This window begins when one attains the age of 62 years. Interestingly, most people chose to file for benefits at this age. Even so, doing so comes with one major drawback: the reduction of your monthly payments. Though Social Security benefits are calculated using your earnings, you are entitled to full monthly payments upon attaining full retirement age (FRA). Below is a table that depicts how FRA is determined using your year of birth. Year of Birth- Full Retirement Age 66 66 and 2 mths 66 and 4 mths 66 and 6 mths 66 and 8 mths 67 Filing for benefits at age 62 results in a reduction of your benefits. Initially, you’ll take a 6.67% reduction during the first three years and a 5% reduction every year after that. This means that an FRA of 67 lowers your benefits by as much as 30%. Rule # 3: You Gain Nothing By Delaying Your Benefits Past the Age of 70 Though filing for benefits before FRA reduced the amount you receive, holding from filing a claim acts in the opposite way. You benefits increase with 8% each year you postpone filing your claim. Nonetheless, this provision expires once you attain the age of 70 years with an FRA of 66. All the same, delaying filing your Social Security claim is the best way of ensuring that you receive large monthly income payments. Tip # 4: Social Security Benefits for the Unemployed Most people assume they won’t collect Social Security benefits as they aren’t federal employees. Fortunately, Social Security covers spouses of employees who pay into the fund. This means that once your spouse files a benefits claim, you are entitled to 50% of their monthly payment. What’s more, spousal benefits are also available for spouses who pay into the system. Typically, Social Security makes monthly benefit payments or half of your spouses allowances. Assuming you receive $750 each month and your spouse gets $1,800, your total monthly payment equals $900. Rule # 8: Social Security Doesn’t Act as Retirees main Source of Income Although Social Security provides income to seniors, it was not intended to act s their sole source of income for retirees. Often, seniors require between 70% and 80% of their income before retirement to meet their living expenses. On the other hand, Social Security caters for only 40% of a retiree’s monthly payment. Though it can come in handy, it can’t replace the benefit of having sufficient personal savings and extra income from other sources. Given that, you need to learn more about Social Security to increase your chance of enrolling in this program at the right time. Although you might think that retirement is decades away, knowing how this program works can help you leverage its provisions.