Broker Check
Understanding Your Social Security Benefits

Understanding Your Social Security Benefits

April 22, 2024

Since March 2011, the Social Security Administration ceased mailing annual benefits statements.
Consequently, many individuals have deferred dealing with this matter, often relegating it to a later date.
However, reviewing your statement can prove immensely beneficial in understanding your future retirement income,
as well as potential current family benefits in the event of an early demise.

 

To access your Social Security statement, simply log in to the Social Security Administration's website at www.ssa.gov.
After completing the necessary security checks and logging in, download your Social Security statement.

Income Benefits

Within your statement, you will discover a chart detailing your monthly benefits at various starting ages. These figures are presented
in today’s dollars without accounting for future inflation adjustments.

For individuals born in 1960 or later, the full retirement age is set at 67. Benefits claimed prior to this age incur
a reduction of 5/9 of one percent for each month taken early, up to 36 months. Beyond 36 months, each additional
month early will result in a reduction of benefits by 5/12 of one percent. Consequently,
opting for benefits at age 62 will yield a 30% reduction in benefits. Conversely, delaying benefits until full retirement age
will see benefits increase at a rate of 2/3 of 1 percent per month (equating to 8% per year) up to age 70.

Survivor Benefits

Understanding survivor benefits holds particular importance for individuals with dependents. While the one-time death benefit of $255
may offer limited assistance, monthly benefits are calculated at 75% of your Full Retirement Amount (“FRA”) per minor child and spouse,
with a family maximum ranging between 150% and 180% of the FRA. In a hypothetical scenario, the family would receive a maximum benefit
of 180% of the FRA monthly, divided equally among eligible recipients – 1) the children of the deceased
worker (typically up to age 18 or upon completion of secondary school) and 2) the surviving spouse caring for a
child of the decedent up to age 16. Understanding the potential income sources for a family in the event of a parent's passing
is crucial when considering other life insurance benefits.

Your Social Security statement also provides essential information on when to apply for Medicare (within 3 months of your 65th birthday
to avoid a lifetime late enrollment penalty), disability benefits, and a detailed history of your earnings record. Understanding your income,
protection, and benefits are integral components of grasping your personal financial plan.