What you should know before drawing your Social Security?

Social Security is a government program that provides financial assistance to various groups:

• Retirees

• Disabled individuals

• Survivors such as widows, widowers, divorced spouses, unmarried children, and dependent parents.

It offers a regular income stream to help cover essential expenses during retirement.

The two most common questions about Social Security are:

• When do I qualify for benefits?

• How are my benefits calculated?

Retired individuals who are not disabled or survivors can take a reduced Social Security benefit as early as age 62. Full benefits are available upon reaching Full Retirement Age (FRA), which is calculated based on birth year and generally falls between age 66 and 67.The Social Security Administration provides a calculator on their website to determine benefit eligibility timeline. The Social Security Administration provides a chart to help individuals understand how much their benefit will be reduced if they start receiving benefits from age 62 up to their full retirement age.To qualify for Social Security benefits, one must accumulate a certain number of work credits through employment covered by Social Security. The Social Security Administration calculates your Primary Insurance Amount (PIA) based on the 35 years where you earned the most income.

Your PIA is the estimated benefit you would receive at full retirement age, but it might be different if you’re eligible for a government pension, or if you opt to delay taking your benefit. Your benefits are adjusted for cost of living once you turn 62.

There are three options for taking a Social Security Benefit:

• At 62 with a reduced monthly benefit

• At full retirement age with a full estimated benefit

• Past full retirement age with a higher monthly benefit for each year delayed

The decision on when to start receiving Social Security benefits has pros and cons for each option.Delaying Social Security withdrawals can increase monthly benefits but may reduce initial retirement cash flow.

Starting Social Security benefits early results in a reduced monthly benefit that is permanent.Factors influencing the decision on when to withdraw Social Security include personal health, financial needs, and employment status.

Survivors such as widows, widowers, divorced spouses, unmarried children, and dependent parents details:

Spouses can qualify for Social Security benefits based on their partner’s work record if they are 62 or older or have a child who is under 16 or disabled.

Divorced individuals may still be eligible for spousal benefits if they are over 62, were married for 10+ years, and are not remarried. If you’ve worked and paid into Social Security, both you and your spouse may be eligible for benefits.

There is a maximum family benefit amount between 150% to 180% of your benefit amount.Survivor benefits are available to surviving spouses, children, or dependent parents of a deceased worker who was covered by Social Security.

Social Security benefits generally aren’t taxable unless you have “substantial” other income.

Social Security plays a pivotal role in a long-term financial plan, providing a stable base of income and allowing for the optimization of other retirement assets.

Applying for Social Security benefits involves providing information such as your Social Security Number, birth details, recent work history, marriage information, direct deposit information, and information for any qualifying children.

Social Security Earned Income Level - Tips:

Here are some key points to understand about the Social Security earned income level:

• For the year 2025, the limit of earned income is $23,400.

• For every $2 you exceed the Social Security earned income limit, your benefits reduce by $1.

• Passive income doesn’t count towards earned income.

• You might be able to get back the reduced benefits when you reach full retirement age. The Social Security Administration will recalculate your benefits and may give you a little bit each month back.

• 1 credit costs $1730.

• Social Security calculates your benefits by taking the highest 35 years of your earnings and dividing it into 420 months to give your total.

Please consult your tax planner or CPA for more information on Social Security Earned Income.