Navigating Social Security options

Social Security cards and cash

As you near age 60, it’s important to start thinking about your Social Security options. When do you want to begin taking your benefits? What are the potential tax obligations? Here is some key information to consider.

Full benefits

Currently, regular full benefits begin between the ages of 65 and 67. Review your annual Social Security statement for your estimated benefit. Refer to the Social Security Administration’s retirement chart to determine your full retirement age. LGFCU’s Estimate Retirement Benefits calculator can also help give you a general idea of how much you might receive in a monthly benefit.

Early benefits

If you elect to take early Social Security benefits, you’ll be subject to income limits if you continue to earn a paycheck and collect benefits. If you’re under full retirement age for the entire year you begin taking benefits, Social Security deducts $1 from your benefit payments for every $2 you earn above the annual limit. For 2018, that limit is $17,040.

In the year you reach full retirement age, Social Security deducts $1 in benefits for every $3 you earn above your earnings limit. In 2018, the limit on your earnings is $45,360. Social Security only counts earnings before the month you reach your full retirement age. It is important to be aware of these limits since your Social Security benefit will be reduced.

Delayed benefits

Another option is to delay receiving benefits, if you plan to continue working. Until age 70, most Social Security recipients will get an 8 percent annual benefit increase each year they choose to delay Social Security. This can be a helpful option to boost retirement income, but it will be important to factor in your life expectancy.


Depending on your total income and tax filing status, a portion of your Social Security benefits may be taxable. According to Social Security, no one pays federal income tax on more than 85 percent of their Social Security benefits.

If you file your taxes as an individual and your combined income — defined as your adjusted gross income plus non-taxable interest (if applicable) plus one-half of your Social Security benefit — is between $25,000 and $34,000, you may have to pay income tax on up to 50 percent of your benefits. If your combined income is more than $34,000, up to 85 percent of your benefits may be taxable.

If you file a joint return, and you and your spouse have a combined income between $32,000 and $44,000, you may have to pay income tax on up to 50 percent of your benefits. If your joint income is more than $44,000, up to 85 percent of your benefits may be taxable. If you’re married and file a separate tax return, you probably will pay taxes on your individual benefits.

Combined income ranges that trigger taxable benefits

Filing Status Up to 50% of benefits taxed Up to 85% of benefits taxed
Individual $25,000- $34,000 Over $34,000
Married $32,000- $44,000 Over $44,000

Source: Social Security Administration website

If your Social Security benefits will be taxable, you can either set up federal tax withholdings from your monthly payments or make estimated quarterly tax payments. Navigating Social Security can seem like a confusing process; it doesn’t have to be. Take time to research your options and set up an appointment at a Social Security office near you.

The advice provided is for informational purposes only. Contact your financial advisor for additional guidance.

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