Social security for dummies

Know how much should you save before retirement

Advisors normally suggest you use about 70-85% of your pre-retirement income to maintain your standard of living and use your benefits for the rest. Many things factor into that number, such as how much you make, the standard of life you wish to continue, and when you started to claim social security.

Decide when you should claim your benefits

Most people claim their benefits within the first few years of eligibility. By doing this, they are locking themselves into a smaller monthly rate. That rate is also locked in for the benefits your spouse will receive after you pass. If you can, wait as long as possible to claim your social security because the longer you wait, the bigger that check with be every month.

Know what happens if you claim and still work

You can get Social Security benefits and still keep working, but if you are younger than the full retirement age and make more than the yearly earnings limit, your benefit will be reduced. If you continue working, you will continue to pay Social Security taxes on your earnings so your benefits have the potential to increase.

Create a plan with your spouse

Those who are married have a huge advantage over those who are single. The most common practice is to suspend claiming the breadwinner’s benefits right away to let the unclaimed benefits grow significantly while living off of retirement savings and the other spouse’s benefits.

Consider mortality

It isn’t morbid to think about your own death when you are strategizing the best plan to live life to the fullest in retirement. While it is a mystery for most, use what you know about your health and lifestyle to make an assumption. With modern medical technology and national averages showing we are living longer, it may be in your best interest to avoid claiming benefits too early.