Social Security

For people born between 1943 and 1954 full retirement age is 66. It gradually climbs toward 67 if your birthday falls between 1955 and 1959. For those born in 1960 or later, full retirement age is 67.

To be eligible for social security benefits in retirement, you must earn at least 40 “credits” throughout your career. You can earn as many as four credits a year, so it can take 10 years of work to qualify for Social Security.

Your benefits are based on the 35 calendar years in which you earned the most money. Each year with no earnings will be factored in at zero. You can increase your benefits at any time (even via part-time work in retirement).

Which depends on the age you retire. For someone at full retirement age in 2021, the maximum monthly benefit is $3,113. For someone filing at age 70, the maximum monthly amount is $3,895. Estimate your retirement benefits with the free, SSA calculator.

Every year, the government adjusts benefits to take inflation into account. Known as Cost-of-Living Adjustment or COLA, this protection can help you keep up with rising living expenses during retirement. In 2021, Social Security beneficiaries will see a 1.3% COLA in their monthly Social Security Benefits.

You can collect Social Security benefits as soon as your turn 62 but taking benefits before your full retirement age results in a permanent benefits reduction—of as much as 25% to 30%, depending on your full retirement age. There’s a big bonus to delaying your claim—your monthly social security benefit will grow by 8% a year until age 70.

Marriage brings couples an advantage. One spouse can take what’s called a spousal benefit, worth up to 50% of the other spouse’s social security benefit. Minor children of social security recipients can be eligible for benefits. Children up to age 18 (or 19 if they are full time high school students) and disabled children older than 18 may be able to receive up to half of the parent’s social security benefit. The disability must have occurred before the age of 22. As long as the disability prevents the person from working, the adult child can continue collecting the benefit even after the parent has died.

Say you claimed benefits, but you wished you hadn’t. Within the first 12 months of claiming Social Security benefits, you can withdraw the application. You will need to pay back all the benefits you received. You can later restart your benefits at the higher amount you’ll earn by waiting.

Benefits lost their tax-free status in 1984, as a result, it doesn’t take a lot of income for your Social Security benefits to be taxed. There are also 13 states that tax social security benefits:

• Colorado
• Connecticut
• Kansas
• Minnesota
• Missouri
• Montana
• Nebraska
• New Mexico
• North Dakota
• Rhode Island
• Utah
• Vermont
• West Virginia