Social security is an often overlooked but important source of income for many retired executives. However, the rules and benefits of social security can be complex and confusing. In January of 2023 we hosted Robert Kron to join our clients for a discussion on the key provisions of the program so that our families can best take advantage of their benefits.
Here is a brief summary of some of the most important Social Security rules for retirees:
Eligibility: To be eligible for Social Security retirement benefits, you need to have worked and paid Social Security taxes for at least 10 years. You can start receiving your benefits as early as age 62, but your benefit amount will be reduced if you claim before your full retirement age. Your full retirement age depends on your year of birth and ranges from 66 to 67.
Benefit amount: Your benefit amount is based on your average earnings over your 35 highest-earning years, adjusted for inflation1. The higher your lifetime earnings, the higher your benefit amount. If you delay claiming your benefits past your full retirement age, your benefit amount will increase by 8% per year until age 70. There is no additional increase for claiming after age 70.
Taxes and income limits: Your social security benefits may be subject to federal income tax, depending on your total income and filing status1. If you are under your full retirement age and still working, your benefits may be reduced if your earnings exceed a certain limit. The limit for 2023 is $21,240. However, the reduction is not permanent and your benefits will be recalculated when you reach your full retirement age to account for the months you received reduced benefits.
These are some of the basic rules of social security for retirees, but many other factors and options may affect your benefits. For more information, you can visit the official website of the Social Security Administration or create a personal My Social Security account to get personalized estimates and access your earnings record.
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