6 Key Things To Know Before You Start Collecting Social Security


One of the first questions my clients ask me is, “When should I start collecting Social Security?” This can be a complicated and almost paralyzing subject. As an agent who helps people with retirement planning and Medicare, I wanted to share with you some of the lessons I learned and give you some tips.

1. Create an online Social Security account

This may sound like simple advice, but it is often overlooked. The Social Security Administration stopped sending statements by mail in 2011. There are some exceptions, but for the most part they do not send them by mail. Sign up for an account and make sure your earnings are correct.

Professional advice: Find out the amount of income at age 62 and the full retirement age. It is important to understand the structure of the payment.

2. Create a retirement budget

If you’ve spent your career working within a budget, this won’t be difficult for you. You’ll want to consider the travel, hobbies, and extra funds you’re now ready to use. Of course, your budget should start with your bills and any debt you may have incurred. What’s left can be used for fun. If you’ve never created a budget, here’s a good place to start:

  • Put your income, which you make or collect, on a piece of paper on top.
  • List all your financial obligations, such as rent, mortgage, utilities, cell phone, cable, internet, credit and car card payments, life and health insurance, subscriptions, and more.
  • Separate your expenses for food, gas, gifts, restaurants, pet care, and any extra monthly expenses.
  • Finally, subtract the amount of your obligations from the amount of money you earn each month.

The hardest part of it all is just doing it. You have to live within your means and see where you can reduce costs. Some couples I know have sold one car and shared the other. It actually worked really well and saved them a lot of money. Your goal is to have money left over to enjoy what you want to do.

Professional advice: Practice living within your budget for a month. Can you do that? What could be cut? Where can you spend more? Then you can adjust accordingly.

3. Start connecting the numbers

This may seem tedious, and most of us would rather just ignore it, but it’s important to know how much money you have in your accounts. This is also important for your children to understand, in case they need to intervene and help. I’ll give you a sample of where to start.

  • Start with your Social Security sick leave at age 62.
  • Include any pensions you may have.
  • Look at other sources of revenue, such as 401k, IRAs, or additional investments.
  • Ask yourself if the money for your lifestyle is what you want, or need to change your lifestyle, make money, or possibly pay off debt.
  • Then use the same numbers, but connect your Social Security to full retirement age.

Did that make all the difference? If so, then you have the start of a retirement plan.

4. Important questions to ask about your spouse or ex-spouse

I have some questions I ask about marriage and divorce. These are good places to start when diving into when to collect Social Security. The answers may surprise you.

  • Have you been married for at least 10 years to a former spouse?
  • Do you have your Social Security number? If not, can you get it?
  • Did you know that you can claim part of your Social Security? It may be less than yours, but it’s worth calling or connecting online to see what the amount is. You will need your Social Security number to find out.

If you have been married for 10 years or more, then you have a Social Security claim from your spouse or ex-spouse. It may be lower than your current payment, but it may be even higher.

5. Taxes

Like almost everything else, Social Security can pay taxes. A financial planner can help you discern which taxable sources of savings are taxable and which are not, once withdrawn. The formula used to determine your Social Security taxes is called the provisional income formula.

6. Who to call

The Social Security Administration encourages you to call the main toll-free number. But in my experience, calling your local office is a way to get better service and faster answers. You can enter your zip code here to find the office closest to you.

The most important piece of advice I can offer is to start this process early. The government does not take a penny. Look at all your sources of income and see if you can defer Social Security. Finally, talk to a person who works for guaranteed income.

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