When do you want the government to start paying you back? It’s not a simple question.
If you’ve worked at least 10 years (the jargon is 40 credits – 4 credits are earned each calendar year, so that computes to 10 years), then you have a right to receive Social Security payments. You can choose to start receiving payments anytime between ages 62 and 70.
Now it starts getting complicated. You get paid 100% of the benefit when you reach your FRA – Full Retirement Age. That will be sometime between age 65 and 67, depending upon your birthdate. If you choose to receive benefits before then, you will get paid a discounted amount. If you choose to wait until after your FRA, then you receive more than the 100% amount.
But wait…..there’s more.
Your benefits are calculated on your highest 35 years of earnings. What if you start benefits at age 62 and you’ve only worked 32 years? The government puts in $0 for the missing 3 years, and then averages.
What if you start your benefits while you are still working? If you are under your FRA, you are penalized for everything earned over $15,720.00.
If you are married, then before you claim, you should consider the impact on spousal benefits. If your spouse is at least 62 years old and you have claimed benefits, then your spouse can also claim under your benefits. Roughly speaking, your spouse’s benefit will be 50% of your amount. If you claim early, then your spouse’s benefit will be discounted along with yours.
There’s lots more to the law. For example, we haven’t even touched on benefits for divorced spouses or survivors, or technical strategies like “file and suspend.”
The take-away is – don’t make this decision lightly. Before you or your spouse hit 62, go to a professional who can run the numbers and advise you.
Hammerle Finley Law Firm- Give us a call. We can help.
Virginia Hammerle is a Board Certified Civil Trial Attorney by the Texas Board of Legal Specialization and an Accredited Estate Planner by the National Association of Estate Planners & Councils. She can be contacted at [email protected] The information contained in this article is general information only and does not constitute legal advice. ©2015