Social Security: How it Works & Claiming Considerations

Join Mueller Financial Services, for an in-depth discussion on Social Security. In this episode, she shares how social security works and considerations when claiming. 

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Securities offered through LPL Financial. Member FINRA / SIPC. Investment advice offered through IHT Wealth Management, a registered investment advisor. IHT Wealth Management and Mueller Financial Services, Inc. are separate entities from LPL Financial.

Transcript

[00:00:00] Ashley: Hi, I'm Ashley, and you're listening to "Managing Your Wealth: Your Vision, Our Guidance." Today we welcome Mueller Financial Services professional, Lisa Fabrizius, to talk about Social Security. But before we get started, let's find out more about our guest. 

[00:00:23] Ashley: Lisa is a wealth advisor who has 22 years of experience in financial consulting services and economic research and analysis.

[00:00:29] Ashley: Lisa is especially skillful at identifying customer needs and delivering investments in services to match. She is also a key member of the insurance and risk management niche and Mueller financial services.

[00:00:43] Ashley: First off, Lisa, thank you so much for joining us today. 

[00:00:46] Lisa: Happy to be here. 

[00:00:47] Ashley: I know social security is part of the retirement plan for almost every American worker, but when can you claim social security and what will you make?

[00:00:55] Lisa: Thank you, Ashley. Yes, the earliest you can claim social security benefits is at age 62.

[00:01:00] Lisa: If you claim at this age, you won't get your full retirement benefit. Meaning many retirees are settling for much smaller benefit in perpetuity, rather than wait for more. Once you turn on your social security, that is your benefit. Now there is a one-time change form that you can use one time and you need to pay back all the benefits that you received up to that point. You will receive your full benefit if you claim at your full retirement age, which for most of us is age 67 for those born in 1960 or later, and you will receive extra benefits if you don't claim until age 70. After age 70, you won't receive any additional increases, so there's no reason to wait beyond that age. If you claim benefits early, you will lose 5/9 of 1% of your benefit each month for up to 36 months before your normal retirement age. Here's a simple example, if your full benefit was a thousand dollars per month at age 67, your full retirement age, you would receive just $700 a month if you started claiming your benefits at age 62. If you wait until your full retirement age to claim your benefit, social security also gives you an incentive to wait longer. You would receive an additional 8% annually, if you wait that additional three years, from age 67 to age 70. Each year your benefit would increase by an 8% simple interest.

[00:02:24] Lisa: So again, using that same math example, if your full benefit was a thousand dollars a month and you wait until age 70, your full benefit would be $1,240 at age 70. 

[00:02:35] Ashley: As a follow-up to that, what other factors should be considered when choosing a time to file?

[00:02:40] Lisa: Okay, so we first got a little bit of background, but what we should also consider is a couple of other factors when choosing a time to file for our social security benefits.

[00:02:49] Lisa: This is a very personal question and everyone's situation is a bit different. Here's some things to consider. Do you need the income? What other sources of income do I have? How long do you think you will live? Longevity in the family? What does your health look like now? Are you not interested in maximum out your benefit? You want to live now, enjoy life? Maybe just take a part-time job and be able to travel a little bit more? 

[00:03:11] Ashley: Okay, so now that we have a better understanding of what to consider and when to claim social security, can you also tell us how social security benefits are determined?

[00:03:19] Lisa: Sure, you must have 10 years of earnings or 40 credits. You receive one credit for every quarter you work, this qualifies you to receive benefits. Now, the next important thing to know is that your benefits are calculated off your top 35 years of earnings. So I would recommend checking your earnings history. I ran to some instances that there are wrong figures on client statements. To do this you can register at SSA.gov. It only takes a few minutes and you can print out your most recent statement. This will have your earnings record and then your current estimated benefit. If you are still working, you should check at least once a year to make sure all is accurate. 

[00:03:57] Lisa: There is a process to dispute if you believe that there is inaccuracy found.

[00:04:02] Ashley: What if I want to claim and continue to work? Are there any restrictions? 

[00:04:06] Lisa: Yes, social security does limit what you can earn when you are already getting your benefits. So for 2022, if you're under your full retirement age, you may earn up to $19,560 a year with no decrease in your benefit.

[00:04:24] Lisa: If you go above this figure $1 benefits withheld for $2 of earnings above that limit. When you reach your full retirement age, it changes the bit. The limit goes up to $51,960 a year. 

[00:04:39] Lisa: Going above that figure every dollar of benefits withheld for $3 earnings above that limit for months prior to reaching full retirement. Now great news is when you reach the month of full retirement age and beyond, there is no earnings limit and there's no decreases to your benefit. 

[00:04:58] Ashley: Now what about spousal benefits?

[00:05:01] Lisa: Yes, a spouse can get 50% of the primary worker's benefit. If that spouse is at the full retirement age. If that spouse is under the full retirement age, that would decrease as possible benefit as well. But the maximum a spouse can ever receive off a spousal benefit is 50% of the other spouse's benefit.

[00:05:20] Lisa: A spouse will get the higher of their own benefit or the spousal benefit. Former spouses may be entitled to spousal benefits as well, but they must have been married for at least 10 years and divorced for at least two years. 

[00:05:33] Ashley: Can you expand on survivor benefits? And if there are any available? 

[00:05:37] Lisa: Yes, a surviving spouse will receive the higher of either their own benefit or their deceased spouse's benefit. Requirements are that the surviving spouse must be at least 60 years old.

[00:05:50] Lisa: The surviving spouse must be at least 50 years old if disabled. If disabled, you must be married for at least nine months prior to the spouses' death and there are exceptions for accidents. 

[00:06:01] Ashley: There seem to be a lot of factors to keep in mind when claiming social security. My final question for you is what are some divorce rules for claiming?

[00:06:09] Lisa: Um, great question. Divorce rules. Um, the must be married to the spouse for at least 10 years. They are currently unmarried, both are at least age 62, divorced for at least two years, surviving benefits of divorced couples married to an ex spouse for at least 10 plus years, unmarried or married after the age of 60, and they are at least age 60.

[00:06:33] Lisa: So let me say that again in terms of survivor benefits of divorce couples. Married to the ex spouse for 10 plus years, they need to be unmarried or married after the age of 60 and must be at least 60 years old.

[00:06:47] Lisa: So from our brief discussion, you can see that there are many things to think through when deciding to be, to begin your social security benefits.

[00:06:54] Lisa: I would encourage everyone to reach out to your wealth advisor to help frame your decision. 

[00:06:58] Ashley: Lots of great information about social security. Thank you so much for joining me on this episode, Lisa. 

[00:07:06] Ashley: And thank you to our listeners. If you're interested to learn more about social security or about Mueller Financial Services in general, visit www.muellerfinancialsolutions.com, where you can find out more about the Firm's services and team members. You can also follow the Firm on LinkedIn at Mueller Financial Services, Inc for more Firm updates, insights, and upcoming events.

[00:07:26] Ashley: Securities offered through LPL financial member, FINRA/SIPC. Investment advice offered through IHT Wealth Management, a registered investment advisor. IHT Wealth Management and Mueller Financial Services, Inc are separate entities from LPL Financial. 

[00:07:44] Ashley: The opinions voiced in this podcast are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which strategies or investments may be suitable for you, consult the appropriate qualified professional prior to making a decision.