For many people living in Lawrenceburg, Indiana, Social Security payments comprise a significant component of a reliable retirement plan. If you know for sure that you will be eligible to start receiving Social Security payments after turning 62, then now is the time to start asking more detailed questions and planning ahead.
Here are four important things to think about when you’re looking to maximize your monthly retirement income with Social Security.
1. What are the future factors that will affect your benefits?
Will you be continuing to work a part-time job past your official retirement age? If so, then you may be eligible to add further earnings to your Social Security plan. Your cumulative earnings will accrue to the amount used to calculate your distributions when you decide to take them.
In addition, your Social Security income may incur a tax liability if you are also going to be earning money from investments while you are retired. Fortunately, a competent estate planner can help you look ahead to minimize any potential tax bills.
2. Do you have all the required documentation to start receiving your benefits?
To receive Social Security benefits, you’ll need to supply the following:
- The number and routing information for the bank account that will receive your benefit
- The current status of your citizenship in the United States
- Any previous filing information for Supplemental Security Income, Medicare, or Social Security
- Current and previous employment information
3. When will you start taking your benefits?
This is arguably the most important question on the list. While opinions from financial advisors vary greatly on what the right age is to start receiving your monthly payments, everybody agrees that there are some general factors that everybody needs to consider.
First, will Social Security benefits be your primary form of retirement income? If not, then will you have a steady source of income for at least five to seven years after you turn 62? People who wait until age 70 to start receiving monthly benefits can receive as much as an extra 25% over those who opt to receive monthly checks as soon as they are eligible.
4. Do you need to do anything after starting to receive your benefits?
If you begin working again after you start receiving your benefits, then you may be subject to the government’s earnings test. In 2021, the maximum earning threshold was roughly $18,960. If you earn over this amount between age 62 and age 66 and 2 months, then you’ll face a reduction in your benefits that is equal to half of the amount that exceeds the threshold.
While planning for retirement can be daunting, getting ahead with a proper estate plan can help give you peace of mind for the road ahead. A trustworthy financial advisor can show you the optimal way to handle Social Security benefits for your current situation.