Dig Deep Into Social Security on These Key Issues
With so much on the line financially, Social Security recipients, current and future, need to know as much as they can about the program and how it operates.“Social Security is not easy to figure out since there are exceptions to the exceptions and it isn't easy to find them in the Social Security manual,” Kevin Walton, a Southern California registered Social Security analyst, told NTD News. “It's worth mentioning that the SSA, like the IRS, isn't allowed to give advice. You need to ask laser-specific questions when speaking with the SSA to get answers and realize they may not offer solutions to further optimize your situation.
Know the first-year limit
If you opt to receive Social Security payments before full retirement age (typically near or at age 67), there’s a first-year earnings limit of $24,480.Starting with the month you reach full retirement age, the SSA applies no limit on how much you can earn and still receive your benefits.
“For every $2 you go over that limit, you pay SSA back $1,” Walton said. “However, the first calendar year you start receiving benefits, there's also a monthly income maximum limit of $2040 (or $24,400 divided by 12). If you earn in any one month during the first calendar year over $2040, the same penalty applies. For the first calendar year, it's not only an annual income limit, but it's also a monthly limit.”
Social Security has an ‘on-off’ option
If you change your mind after turning on Social Security and want to turn it off and wait for a higher benefit amount, there are ways to do that.Don’t miscalculate the COLA numbers
One of the biggest mistakes people make when claiming Social Security is assuming that the annual inflation adjustment (COLA) added to their monthly income will be sufficient to cover the increased living costs they will experience throughout retirement.“Many studies have revealed that the true-cost inflation rate experienced by most senior citizens is nearly double the official COLA rates added to Social Security payments each year,” Stack noted. “This means that a retiree who comfortably begins drawing Social Security at 62 might find it difficult to meet higher living expenses by age 68 or before.”
Avoid This Social Security Error
One of the biggest mistakes when people plan for Social Security is relying on others' advice, assuming their situation matches their own.“When to claim social security options is a personal decision,” Walton said. “Aside from knowing your longevity, a myriad of other factors come into play, but not knowing social security rules can financially hurt you in the form of penalties and lost benefits if not claimed when someone was eligible.”