Get To Know Social Security Retirement Benefits

For many, the prime of life is not early adulthood or even midlife. It is the “golden” years of retirement. This era often brings newfound freedom and the opportunity to explore hidden talents, embark on new adventures or revisit nostalgic pastimes.

Financial fitness is one major key to enjoying this time of life and understanding the ins and outs of Social Security is critical. Social Security benefits add significantly to the financial well-being of retirees, but first you must learn how to plan and maximize those benefits.

How Benefits Are Earned

First things first: Workers who have paid Social Security taxes and earned Social Security credits are eligible to earn Social Security retirement benefits. A minimum of 40 credits, earned four credits per year over 10 years, are required to earn any benefits – but benefits are calculated based on your highest 35 years of earnings. This means if your work history falls short of 35 years, those years will be factored in as zero income. For this reason, the longer you are able to work or even replace lower-earning years with higher-earning years, the higher your Social Security benefits will be.

How Benefits Are Calculated

In addition to your earning history, your age at the time you begin to receive benefits also affects how much your Social Security benefits will be:

• Early Retirement – The minimum age for taking Social Security benefits is 62, so if you plan to retire early, you can supplement your savings with Social Security funds. However, beginning Social Security at age 62 means your monthly benefits will be reduced as the intention is to spread them out over a greater period of time.
• Full Retirement – If you were born before 1938, your full retirement age is 65. Everyone else must delay full benefits based on their year of birth. For example, someone born in 1943 to 1956 can receive full retirement benefits at age 66, while those born in 1960 or later must wait until age 67.
• Delayed Retirement – Those who work past their full retirement age can delay receiving Social Security benefits – and when they do, they will enjoy increased benefits. Not only will their longer earning history help them earn higher benefits, but the monthly payout of benefits will also increase based on the shorter timeframe expected to receive benefits.

Receiving Benefits

Once you qualify and elect to receive Social Security benefits, you will receive them for the rest of your life. These benefits are only taxed as income if you earn substantial income aside from Social Security. Additionally, some members of your family can qualify for benefits, including widowed persons, current and former spouses of retirement age, minor children, and adult disabled children.

At APCU, we care deeply for the financial well-being of our members and are happy to help you take a look at your overall financial picture to help you determine your best ways to approach and supplement your Social Security benefits. Let us know how we can help. Stop by any branch or give us a call at (800) 849-8431 for answers to your questions about building greater financial security in retirement.