A few things you may want to think about before filing for benefits.
Whether you want to leave work at 62, 67, or 70, claiming the retirement benefits you are
entitled to by federal law is no casual decision. You will want to consider a few key factors first.
How long do you think you will live? If you have a feeling you will live into your nineties, for
example, it may be better to claim later. If you start receiving Social Security benefits at or after
age 67 (Full Retirement Age), your monthly benefit will be larger than if you had claimed at 62.
If you file for benefits at 67 or later, chances are you probably a) worked into your mid-sixties,
b) are in fairly good health, c) have sizable retirement savings.
If you sense you might not live into your eighties or you really, really need retirement income,
then claiming at or close to 62 might make more sense. If you have an average lifespan, you
will, theoretically, receive the average amount of lifetime benefits regardless of when you claim
them; the choice comes down to more lifetime payments that are smaller or fewer lifetime
payments that are larger. For the record, Social Security’s actuaries project the average 65-
year-old man living 84.3 years and the average 65-year-old woman living 86.6 years.1
Will you keep working? You might not want to work too much, for earning too much income
can result in your Social Security being withheld or taxed.
Prior to age 66, your benefits may be lessened if your income tops certain limits. In 2017, if you
are 62-65 and receive Social Security, $1 of your benefits will be withheld for every $2 that you
earn above $16,920. If you receive Social Security and turn 66 this year, then $1 of your
benefits will be withheld for every $3 that you earn above $44,880.2
Social Security income may also be taxed above the program’s “combined income” threshold.
(“Combined income” = adjusted gross income + non-taxable interest + 50% of Social Security
benefits.) Single filers who have combined incomes from $25,000-34,000 may have to pay
federal income tax on up to 50% of their Social Security benefits, and that also applies to joint
filers with combined incomes of $32,000-44,000. Single filers with combined incomes above
$34,000 and joint filers whose combined incomes surpass $44,000 may have to pay federal
income tax on up to 85% of their Social Security benefits.2
When does your spouse want to file? Timing does matter. For some couples, having the lower-
earning spouse collect first may result in greater lifetime benefits for the household.3
Finally, how much in benefits might be coming your way? Visit ssa.gov to find out, and keep in
mind that Social Security calculates your monthly benefit using a formula based on your 35
highest-earning years. If you have worked for less than 35 years, Social Security fills in the
“blank years” with zeros. If you have, say, just 33 years of work experience, working another
couple of years might translate to slightly higher Social Security income.
3
Your claiming decision may be one of the major financial decisions of your life. Your choices
should be evaluated years in advance, with insight from the financial professional who has
helped you plan for retirement.
Peter Richon may be reached at (919) 300-5886 or info@richonplanning.com and
www.richonplanning.com
Investment advisory services offered through Brookstone Capital Management, LLC (BCM), a registered investment advisor. BCM and Richon
Planning, LLC. & Richon Insurance Agency, LLC. are independent of each other. Fiduciary duty extends solely to investment advisory advice and
does not extend to other activities such as insurance or broker dealer services. Advisory clients are charged a fee for assets under management
while insurance products pay a commission, which may result in a conflict of interest regarding compensation. This material was prepared by
MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. All information is believed to be
from reliable sources; however we make no representation as to its completeness or accuracy. Please note – investing involves risk, and past
performance is no guarantee of future results. The publisher is not engaged in rendering legal, accounting or other professional services. If
assistance is needed, the reader is advised to engage the services of a competent professional. This information should not be construed as
investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor
recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are
unmanaged and are not illustrative of any particular investment.
Citations.
1 – ssa.gov/planners/lifeexpectancy.html [7/27/17]
2 – newsok.com/article/5546356 [5/8/17]
3 – fool.com/retirement/2016/07/16/about-to-take-social-security-read-this-first.aspx [12/15/16]
