Primer on Social Security Benefits for Seniors
January 2009
Requirements. As a general rule, one must have worked for at least 10 years (40 quarters) to earn benefits.
Amount of Benefit. There is no minimum benefit. The maximum benefit for 2009 is $2,323 for a person retiring at Full Retirement Age of 66. For 2009, the average benefit is $1,153.
Retirement Age. Full retirement age has been 65. For people born in or after 1938, the age is increasing. For people born between 1943 and 1954, full retirement age is 66. For people born in 1959 and later, full retirement age is 67.
Early Retirement. You can retire as early as age 62 and receive a reduced benefit. Medicare benefits do not begin until age 65.
Continuing to Work. If you opted to receive benefits before you are full retirement age, and you continue to work, your benefit amount will be reduced. In 2009, $1 in benefits will be subtracted for every $2 one earns over $14,160. Therefore, if you earn $100,000, you would receive nothing in benefits. Nothing would be subtracted if you waited to receive benefits until full retirement age, regardless of how much you earn.
Taxation. You will be taxed on the benefits you receive if your income exceeds $25,000 (single person) or $32,000 (married person). For a single person with income between $25,000 and $34,000, 50% of Social Security benefits may be subject to income tax. For single persons with income exceeding $34,000, up to 85% of Social Security benefits is subject to income tax. For married couples with income between $32,000 and $44,000, 50% of Social Security benefits may be subject to income tax. For married couples with income exceeding $44,000, up to 85% of Social Security benefits may be subject to income tax.
Widows and Widowers. Upon the death of a spouse, if the benefit of the surviving spouse exceeds that of their deceased spouse, they continue to receive the same amount. If their deceased spouse’s benefit exceeded their own, they receive a percentage based of their age and type of benefit. A widow at Full Retirement Age will receive 100% of deceased’s spouse basic benefit.
Delayed Retirement. You can increase your monthly retirement benefit if you delay your retirement. The maximum age that Social Security will pay extra benefits for is 70. For example, a person born in 1973 or later who waits until age 70 to receive benefits, will receive 8% more per year than if he/she had opted to receive benefits at age 66.
For more information, look at www.socialsecurity.gov or contact our office.