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Written by Thomas M. Geier, CPA, CFP®, PFS

social security benefits applicationAs today’s baby-boomers get closer and closer to retirement, one of their most common questions is, at what point should they apply for Social Security benefits? The answer is usually not the same for everyone. It may seem simple that once you reach your “full retirement age,” you just apply for benefits and start receiving your check. However, a closer analysis could be very helpful in order to maximize your total income.

How to Determine the Amount of Social Security You’ll Receive

The reason Social Security is a bit more complex than most realize is that not everyone receives the same amount. Your benefit figure depends on the amount of earnings you received over your lifetime. The Social Security Administration takes your 35 highest paid working years, indexes it to inflation, and then applies a factor. Usually, the more you earned, the higher your benefit.

Your benefit amount is also related to your “Full Retirement Age” (FRA), which is determined by the year you were born. If you were born before 1943, your FRA is 65. Those people born between 1943 and 1954 have a FRA of 66. Those born between 1955 and 1959 have a staggered FRA as two months is added to age 66 for each year. For 1960 and later, the FRA will be 67. So, for 2016, the maximum benefit for someone who had the maximum taxable earnings and retires at their FRA is $2,639.

Adding to the complexity of deciding when to collect, is that you have the option of retiring before or after you FRA. Your benefits will be adjusted accordingly. You can retire early, at age 62, and receive a lower benefit. In general, your payment would be lower by about 30% than if you waited until FRA. Also, if you can delay your retirement until after FRA, your benefit will increase by about 8% each year you wait, up to age 70. These adjustments are permanent. If you retire at a reduced benefit, it will remain at that reduced level for your lifetime.

Another factor to consider is the taxation of Social Security benefits. If you receive income from other earnings, you may need to pay taxes on your benefits. The base amounts for a single taxpayer is $25,000 and $32,000 for married couples.

Choose Geier Asset Management to Discuss Retirement Benefits

The website at the Social Security Administration has some excellent calculators and other tools to help with determining your best age to collect benefits. At Geier Asset Management, we are also available to assist you on a personal basis to discuss your own family circumstances. We can help you plan a successful retirement benefit approach that will outline the various alternatives and best choices. Contact Geier Asset Management to learn more.


© Geier Asset Management, Inc. May2017. Thomas M. Geier is a Vice President of Geier Asset Management, Inc., a Registered Investment Advisor. The above blog reflects the opinions of Mr. Geier and not necessarily the firm. Any advice given is general in nature and investors must consider their own individual circumstances. Past performance is no indicator of future performance. The firm makes no warranties or representations of any kind relating to the accuracy or timeliness of the information provided.