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RETIREMENT • Read Time: 8 min

Social Security: Five Facts You Need to Know

Social Security can be complicated, and as a result many individuals don’t have a full understanding of the choices they may have. Here are five facts about Social Security that are important to keep in mind.

1. Social Security Is a Critical Source of Retirement Income

2. You Can Choose When You Take Social Security

You have considerable flexibility for when you can begin receiving your benefits.

Year of Birth Full Retirement Age
1943 – 1954 66
1955 66 and 2 months
1956 66 and 4 months
1957 66 and 6 months
1958 66 and 8 months
1959 66 and 10 months
1960 or later 67

(Important note: though full retirement age varies, you also may want to consider applying for Medicare benefits three months before your 65th birthday; if you wait longer, your Medicare medical insurance and prescription drug coverage could cost you more.)

As you can see, the decision of when to begin taking Social Security is a critical one.

3. Social Security May Be Taxable

50% of Benefit
Subject to Taxation
85% of Benefit
Subject to Taxation
Individual Filers Combined Income of
$25,000 to $34,000
Combined Income
Greater Than $34,000
Joint Filers Combined Income of
$32,000 to $44,000
Combined Income
Greater Than $44,000

4. Social Security Can Be a Family Benefit

When you start receiving Social Security, other family members may also be eligible for payments. A spouse (even if they did not have earned income) qualifies for benefits if they are age 62 or older – or at any age if they are caring for your child. (The child must be younger than 16 or disabled.)

Benefits may also be paid to your unmarried children if they are younger than 18, between 18 and 19 and enrolled in a secondary school as a full-time student, or age 18 or older and severely disabled.

Family members who qualify for benefits include:

  • A widow or widower
    • age 60 or older;
    • age 50 and older if disabled; or
    • any age if they are caring for your child who is younger than 16 or disabled and entitled to Social Security benefits on your record.
  • Unmarried children can receive benefits if they are:
    • under 18 years of age;
    • between 18 and 19 and are full-time students in a secondary school; or
    • age 18 or older and severely disabled (the disability must have started before age 22).

5. A Divorced Spouse May Be Eligible for Benefits

To qualify, you need to:

  • have been married to your ex-spouse for at least 10 years;
  • have been divorced two years or longer;
  • be at least 62 years old;
  • be unmarried; and
  • not be entitled to a higher Social Security benefit based on your own work history.
1. Employee Benefits Research Institute, April 23, 2020
2. Social Security Administration, 2020
3. Social Security Administration, 2020
4. Social Security Administration, 2020
5. Social Security Administration, 2020
6. Social Security Administration, 2020
7. Under the SECURE Act, in most circumstances, once you reach age 72, you must begin taking required minimum distributions from a Traditional Individual Retirement Account (IRA). You may continue to make tax-deductible contributions to a Traditional IRA past age 70½ under the SECURE Act as long as you meet the earned-income requirement.
8. Distributions from traditional IRAs are taxed as ordinary income, and if taken before age 59½, may be subject to a 10% federal income tax penalty; however, during the year 2020, the CARES Act allows eligible participants to take an early distribution of up to $100,000 without paying the 10% penalty.
9. The guarantees of an annuity contract depend on the issuing company’s claims-paying ability. Annuities have contract limitations, fees, and charges, including account and administrative fees, underlying investment management fees, mortality and expense fees, and charges for optional benefits. Most annuities have surrender fees that are usually highest if you take out the money in the initial years of the annuity contact. Withdrawals and income payments are taxed as ordinary income. If a withdrawal is made prior to age 59½, a 10% federal income tax penalty may apply (unless an exception applies).
10. Social Security Administration, 2020

The content is developed from sources believed to be providing accurate information.The information in the material in not intended as tax or legal advice. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professional for specific information regarding your individual situation. The opinions expressed and material provided are for general information, should not be considered a solicitation for the purchase or sale of any security.

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