Life Events

Social Security is not a flat benefit. What you receive depends on your earnings record, the age you start, and a few choices you make along the way. Understanding those pieces can raise your lifetime income.

How your benefit is calculated

Social Security looks at your highest-earning years, adjusts them for wage growth, and applies a formula to produce your basic benefit at full retirement age. Working at least 35 years matters, because the formula averages 35 years of earnings. Years with no earnings count as zeros. If you have fewer than 35 years, working a little longer can replace a zero year and raise your benefit.

Check your record

Create an account at ssa.gov to view your earnings history and benefit estimates. Errors in your record can reduce your benefit, so correct any missing or incorrect earnings.

The age you claim matters

• You can start as early as age 62, but your monthly benefit is permanently reduced.
• At your full retirement age, which depends on your birth year, you receive your full basic benefit.
• For every month you delay beyond full retirement age, up to age 70, your benefit grows.

Delaying can pay off for those with longer life expectancy or who want greater income later in life, especially a higher earner whose spouse may depend on survivor benefits. Claiming earlier may make sense if you need the income, have health concerns or have a shorter life expectancy.

Working while receiving benefits

If you claim before full retirement age and keep working, an earnings test may temporarily withhold some benefits when your earnings exceed a yearly threshold. Withheld amounts are generally credited back after you reach full retirement age. The thresholds change each year, so check ssa.gov.

Spousal and survivor benefits

A spouse may be eligible for a benefit based on the other's record, and a surviving spouse may receive the higher of the two benefits. Divorced spouses may qualify too if the marriage lasted long enough and other conditions are met. These rules favor careful coordination for married couples: the higher earner's claiming age often determines the survivor's income.

Taxes on your benefits

Depending on your total income, up to a portion of your benefit may be subject to federal income tax. Managing withdrawals from other accounts can reduce how much of your benefit is taxed. Georgia treatment of Social Security income is covered at dor.georgia.gov.

Practical steps

• Check your earnings record every year or two.
• Compare scenarios for different claiming ages for you and your spouse.
• Coordinate Social Security with your other retirement income.
• Apply a few months before you want benefits to begin.

The right claiming strategy depends on your whole picture. Contact our firm and we can help you work through the choices and tax effects.