Applying for Social Security


We all eventually reach a point in life where we have to think about applying for Social Security, so it helps to think about it sooner rather than later.

Every American draws money from Social Security in retirement, it’s just a matter of how and when it starts. If you were born between 1943 and 1954, this starts at age 66. For people born between the years 1955 and 1959, you have to be 66 years and 2, 4, 6, 8, or 10 months old, depending on the year. For anyone born in 1960 or later, full retirement age is 67.

In some cases, however, you can begin drawing money earlier.

But is it something you should do?

Considering Your Retirement Years

It isn’t unheard of for some people to struggle financially in their retirement years. There are plenty of stories about retirees worrying about their money if they haven’t already lost it.

With the right amount of planning, you can keep that from happening to you when applying for Social Security.

If you have to take an early retirement, you can begin collecting money at 62, at which point you can get a portion of your entitlement. At this early age, that portion is 75% of what it would be otherwise. If you are a spouse looking to collect, that benefit is 35% rather than 50%.

It goes the other way, too. You can work longer and collect more. For every year you go beyond your full retirement age, you stand to collect an additional 8%.

Likewise, there are limits for people who work but collect benefits while they are still under the full retirement age. This only lasts until full retirement age is reached but, as of 2016, $1 is deducted from every $2 earned above the annual limit, which is $15,720.

When you reach full retirement age, $1 is deducted from every $3, but only during the months before your full retirement age.

Your Income

How much you earn depends on whether you work for yourself or an employer. If you work for yourself, then it considers net earnings. If you worked for someone else, your earned income is how it is determined.

Earnings like interest, pensions, and annuities are not considered income and won’t be counted against you.

Other Things to Consider When Applying for Social Security

If you are self-employed, you want to keep in mind that the SSA might consider you retired even if you really aren’t. In many cases, you will be considered retired for any month you earn less than a certain amount and do not perform substantial services in self-employment.

“Substantial Services” means either 45 hours or more devoted to a business or between 15 and 45 hours in a highly skilled (related to the managerial or technical needs of the business) occupation.

Any services performed for under 15 hours are not considered substantial.

The Social Security System can be confusing for many people, but the website has a lot of information for anyone interested in applying for Social Security, so you can start there when you are ready.