Social Security is a government program, which means it comes with its fair share of rules and regulations that can confuse almost anyone. But there are some basics that everyone should know.
Learning (and maybe even memorizing) some of these rules can be a huge boon for you as you plan your retirement, or have to make decisions concerning your benefits.
So here are five things that everyone should know about Social Security.
1. When You Start Social Security Determines the Size of Your Checks
We’ve talked recently about full retirement age, which is when you are eligible for your full benefits, and how it affects the size of your monthly Social Security benefits check. You can start collecting as early as 62, or as late as 70.
Here’s a handy chart from USA Today that gives a great breakdown of how big — or small — your check will be depending on when you file:
| START COLLECTING AT: | FULL RETIREMENT AGE OF 66 | FULL RETIREMENT AGE OF 67 |
| 62 | 75% | 70% |
| 63 | 80% | 75% |
| 64 | 86.7% | 80% |
| 65 | 93.3% | 86.7% |
| 66 | 100% | 93.3% |
| 67 | 108% | 100% |
| 68 | 116% | 108% |
| 69 | 124% | 116% |
| 70 | 132% | 124% |
So waiting until 70 can mean a big boost to your monthly benefits.
2. Your Social Security Checks Can Get Bigger
Speaking of bigger checks, there are ways to boost your monthly Social Security income even after you’ve started claiming.
The Social Security Administration uses the 35 years that you earned the most to figure out your monthly benefits. So if you start your benefits while you are still working, there is potential to knock off one of your lower-earning years if you make more in the present.
Married couples can also coordinate to earn more. The lower-earning spouse can start collecting benefits as early as possible, while the higher earner delays until 70 to maximize their potential benefits.
3. Having Little or No Earnings Doesn’t Bar You From Social Security
If you don’t have much earnings, you may still be eligible for some benefits. Generally, you have to be married to reap these benefits, but someone who has been married for at least 10 years can file for spousal benefits. These checks can amount to up to 50% of the spouse’s benefits at full retirement age, which can be a nice little boost to your monthly income. USA Today suggests reading up on the rules for spousal benefits, though, as they can be tricky.
4. Social Security Benefits Can Be Taxed
Don’t think the tax man won’t come for your Social Security benefits. While most benefits are safe, they can still be taxed (up to 50% or even 85%) if you are working while collecting and your earnings exceed a certain threshold. Here’s another handy chart to figure out if your benefits will be subject to duties:
| FILING AS | COMBINED INCOME | PERCENTAGE OF BENEFITS TAXABLE |
| SINGLE INDIVIDUAL | BETWEEN $25,000 AND $34,000 | UP TO 50% |
| Married, filing jointly | Between $32,000 and $44,000 | Up to 50% |
| Single individual | More than $34,000 | Up to 85% |
| Married, filing jointly | More than $44,000 | Up to 85% |
Your benefits may also be subject to a state tax. Check out our coverage of what states tax Social Security in our story here.
5. Social Security Isn’t Meant to Cover All the Bases
This is a big one that many people may ignore. Social Security was designed to only replace around 40% of an average retiree’s income before entering their golden years. So that means you should have a plan to help cover the other 60% if you want to continue living the way you do before retirement.
Recently, the average Social Security check has been around $1,475, or $17,700 a year. You may get more if you earned more before applying for benefits, but no one is raking in $50,000 or $60,000 a year from the program.
Knowing what you are going to get from Social Security is vital because it means less surprises when you enter your golden years. Go to the Social Security Administration’s website and create an account to see what your future benefits are estimated to be. It’s also good to check their records to correct any mistakes.
Knowing these five things can help you maximize your benefits and create a retirement plan that gives you more peace of mind for the future.
• You can find all of the latest and most important news about Social Security here on Money and Markets.