By Steven Joshua Samuel JD, MBA, AIF®

For those of us in or near our 60s, thinking about retirement brings up positive images as well as some anxiety about how to make important financial decisions, especially about Social Security benefits.

Fortunately, there are two excellent sources of information that will provide guidance and answer many of your questions:  www.socialsecurity.gov  and your local Social Security office if you prefer to meet with an expert. Many offices, in fact, will permit you to make an appointment. No, I’m not kidding. This is one area in which our government does a reasonable job of providing information. But until you get a chance to visit the website   or your local social security office, here are five answers to commonly asked questions about social security.

1.  Is it best to apply for social security benefits at the earliest age, 62, or wait until 66 or even 70?

A person retiring at age 62 during 2013 could receive a maximum of $1,923 monthly. The maximum this year for a 66-year-old is $2,533 monthly and for a 70-year-old, $3,350 monthly. Generally, each year a person delays applying for benefits will increase the benefit amount by eight percent.  You can find an estimate of what you would receive at various ages on the social security website by clicking on the social security benefits estimator tab.

About 75 percent of people who receive Social Security now started taking their benefits before age 66, according to the Wall Street Journal, probably because they needed the money for the basics of life expenses and did not have other savings. For a person with significant savings in an Individual Retirement (IRA) account, company 401k or other retirement account, waiting until age 66 or 67 is generally a better choice. Whether to wait even longer, to age 70, requires a more complex assessment. One consideration is that if a person is 66 and gives up four years of benefits to wait till 70 to get an increased benefit amount, the person would have to live as long as 20 years just to recover the amount she would have received in those four years. Another consideration is that while waiting the four years between 66 and 70, if the person needs to take big withdrawals from her   retirement savings and the investment markets don’t do well, her retirement savings may not last her lifetime.

2.  How do earnings affect Social Security retirement benefits?

What you earn from working does not affect Social Security benefits if you have reached “full retirement age.” Full retirement age is about 66 years old except for people born in 1960 or later; then it is 67. If you are not yet at full retirement age, earning up to about $15,000 a year does not affect your benefits but you’ll lose $1 of benefits for every $2 of income above $15,000. During the year you reach “full retirement age” you may earn about $40,000 with no reduction in Social Security, but you’ll lose $1 of Social Security benefits for every $3 over $40,000 of earned income.

3.  What Social Security benefit does a spouse receive?

A person married for 10 years or longer and of “full retirement age” is entitled to receive 50 percent of his or her spouse’s benefit amount. For example, if both spouses are at full retirement age at 66 and one is entitled to $2,500 monthly of social security benefits after a lifetime of work, the other may collect $1,250 monthly even if he or she never worked. A spouse collecting on the basis of his or her spouse’s record of work does not have any impact on the other’s benefits. However, if a person begins collecting benefits before full retirement age, the amount the person can collect based on the record of his or her spouse is reduced. At age 62, he or she may collect only 35 percent of what her spouse collects; at 63 only 37.5 percent; at 64 only 42 percent; and at 65 only 46 percent.

4.  Does a divorced spouse qualify for benefits?

A divorced person can receive benefits based on a former spouse’s Social Security record if he or she was married to the former spouse for at least 10 years, is at least 62, is unmarried and is not entitled to a higher Social Security benefit on his or her own record. The former spouse must be entitled to receive his or her own retirement or disability benefit. If the former spouse is eligible for a benefit but has not yet applied for it, the divorced spouse can still receive a benefit if he or she has been divorced from the former spouse for at least two years.

5.  Does Social Security pay benefits to same-sex married couples and surviving spouses?

Social Security has begun processing some retirement, surviving spouse and lump-sum death payment claims for same-sex couples and paying benefits where they are due.

Of course there are many more than five things you need to know about Social Security and the many related health care and financial issues. Do pay a visit to www.socialsecurity.gov  or your local Social Security office and also consider consulting a trusted financial professional before you make important financial decisions during or near retirement age.

Samuel Financial, LLC is located at 858 Washington Street, Suite 202, Dedham, MA 02026 and can be reached at (781)461-6886.  Securities and advisory services offered through Commonwealth Financial Network, member FINRA/SIPC, a registered investment adviser. www.samuelfinancial.com

April 2014