Social Security benefits: Questions & answers guide


Siena Wealth Advisory Group

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Posted on

Jul 22, 2023


Florida - Southwest

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People have many Social Security benefits questions because it’s such a vast program — we help simplify the information and answer your top questions.

It’s common to associate Social Security with retirement. However, there is much more to Social Security than retirement income. There are many people who can qualify for Social Security benefits including retirees, their spouses, disabled individuals, and survivors of the deceased. For many people in the U.S., Social Security is a valuable program.

In this article:

  • What is Social Security?
  • Who can qualify for Social Security benefits?
  • What are Social Security credits and how are they earned?
  • Can I qualify for benefits based on my spouse’s income?
  • When should I take my Social Security retirement benefits?
  • How is my Social Security benefit amount calculated?
  • When do I apply and how do I apply for Social Security benefits?
  • How can an Ameriprise financial advisor help?


What is Social Security?1

Social Security is a U.S. federal program that provides enrolled individuals with a source of income when they become unable to work or earn sufficient wages on their own. There are three types of Social Security benefits: 

  • Retirement (spousal benefits available in some cases)
  • Disability
  • Survivors


Who can qualify for Social Security benefits?

You are eligible to receive Social Security benefits in the United States once you’ve accumulated 40 work credits — as long as you also pay Social Security taxes (this is applicable for certain government employees or those who are self-employed). Non-U.S. citizens who are living legally in the United States and have earned benefits can also qualify for Social Security.

What if I live abroad?

Most U.S. citizens who live in foreign countries after they retire can qualify for Social Security benefits. However, the U.S. government will not send Social Security payments to those living in Cuba or North Korea. Additionally, Americans living in Azerbaijan, Belarus, Kazakhstan, Kyrgyzstan, Moldova, Tajikistan, Turkmenistan and Uzbekistan must qualify for an exception in order to receive benefits while living abroad.

How do I qualify for Social Security?

    To qualify for Social Security retirement benefits, in most cases:
    • You must be 62+ years old, or disabled/unable to work, and
    • You must have sufficient credits earned throughout your working life.
    To qualify for Social Security spousal retirement benefits:
    To qualify for Social Security disability benefits if you are under the age of 62:

    To qualify for Social Security survivor’s benefits:


    What are Social Security credits and how are they earned?

    Social Security credits determine eligibility and benefit amounts in retirement. In 2023, earning $1,640 in income qualifies as earning one Social Security work credit.2 You are eligible to earn up to four credits per year. Most people need 40 credits (10 years of work) to qualify for Social Security benefits — though younger individuals require fewer credits for disability benefits or for their family members to receive survivor’s benefits.


    Can I qualify for Social Security benefits based on my spouse’s income?

    Short answer: in some cases.
    Retirement benefits are based on your own earnings record. However, spousal and survivors Social Security benefits are based on your spouse’s earnings, whether the spouse is deceased or divorced from you. Keep in mind that you can qualify for spousal or survivors Social Security benefits as well as your own retirement benefit — but, Social Security won’t let you add these amounts together. Instead, you will receive whichever benefit is larger.


    When should I take my Social Security retirement benefits?

    Waiting to collect Social Security benefits may be beneficial if you’re able to do so. While the age to receive your full retirement benefit is 66-67 (depending on the year you were born), you can begin collecting Social Security benefits as early as age 62. But each month you wait to start collecting (up until age 70) increases your eligible benefits.4
    Once you reach full retirement age, you’re entitled to 100% of the benefits calculated from your lifetime earnings. If you wait until age 70 to begin collecting Social Security, your retirement benefit will be 32% larger.3

    However, waiting may not be the right choice for everyone. Your financial advisor will help you determine an approach that reflects your options and your personal situation. For example, they may consider:

    • Varying tax rates on Social Security income
    • Capital gains and IRA withdrawals
    • Health issues and life expectancy in your family history
    • Whether your current retirement accounts and additional sources of income (including Social Security or pensions) will cover your essential expenses before you reach full retirement age

    View our Social Security Infographic for more information


    How is my Social Security benefit amount calculated? 

    Another common Social Security benefits question is how payments are calculated based on your lifetime earnings. To account for changes in average wages each year, the Social Security Administration (SSA) indexes your income using the national average wage index. The SSA calculates your average indexed monthly earnings (AIME) based on the 35 years in which you earned the most. A formula generates your basic benefits, otherwise known as your primary insurance amount. This primary insurance amount (PIA) is what you would receive at your full retirement age. If you were born between 1955 and 1959, full retirement age is between age 66 and 67. For those born in 1960 or later, full retirement age is 67.5


    When do I apply and how do I apply for Social Security benefits?

    The SSA recommends applying four months before you want your Social Security retirement benefits to begin.  
    There are two ways to apply:

    • Online application: Find it on the Social Security Administration’s website.
    • Over the phone: Call 1-800-772-1213 (TTY 1-800-325-0778) from 8 a.m. to 7 p.m., Monday through Friday, to apply by phone.


    How can an Ameriprise financial advisor help?

    Your Ameriprise financial advisor can answer any Social Security benefits questions you may have, as well as evaluate your Social Security options and help you with your overall retirement income planning. They will review how scenarios (such as working longer or delaying benefit collection) can help optimize the benefits for you, a spouse or family members.

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This could be especially beneficial if your spouse has higher lifetime earnings than you.Understanding the Earnings Test: If you claim Social Security benefits before your FRA while still working, your benefits might be temporarily reduced based on your earnings. Understanding this earnings test lets you strategically plan when to claim benefits.A professional advisor can illuminate these strategies and help determine your best path. After all, its about creating the most vibrant, care-free retirement lifestyle possible. 3. 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Here are a few ways to use life insurance to your advantage:Accelerated Death Benefits (ADB): Certain life insurance policies come with an ADB clause, enabling policyholders to get an advance on their life insurance death benefit, tax-free, while they are still alive. This provision comes into play if the policyholder has a terminal illness or needs long-term care.Life Settlements: In a life settlement scenario, you sell your life insurance policy to a third party at its present value to generate immediate funds, which can then be utilized to pay for care.Viatical Settlements: Much like life settlements, viatical settlements involve selling your life insurance policy to a third party. 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However, it is simple to get a short-term bridge loan very quickly using the equity in the house. You can use this money for immediate needs. When the house sells, the bridge loan is paid off. And you can put the remainder of the sales proceeds into an account for future assisted living expenses. A HELOC and a RentalIf you decide to keep the seniors house for rental income, you can still get a lump sum of money with a home equity line of credit (HELOC). This gives you the advantage of:Getting a tax-free lump sum of cash.Using the rental income to pay back the HELOC and help with assisted living costs.Keeping the house in the family.Receiving the benefits of appreciation when the house increases in value.These decisions can be complicated and come with tax issues to consider. But, they are also very powerful and important. It is always wise to meet with a certified financial advisor, specifically one who specializes in working with seniors. A financial advisor can holistically assess your financial situation and help you make the most cost-effective decisions for how to pay for senior living.   Unlocking the Inside Track Insider SecretsIts often said that we dont know what we dont know.Gaining access to the best financial strategies when exploring assisted living communities requires in-depth industry knowledge. Like any complex industry, some unique strategies and techniques are not readily apparent to outsiders.Certain communities may offer flexibility with initial fees, accept evidence of a future real estate closing, or provide leeway as you apply for veterans or other benefits. But how do you identify these communities and find these opportunities?Every senior and their family desires the best financial arrangement possible. However, navigating the assisted living marketplace can be a daunting task, with most people unsure about where to start or which questions to ask.Your Free, No-Strings-Attached Consultation with the ExpertsMaking decisions on funding assisted living can feel like a monumental task. Comparing communities, understanding financial commitments, and securing the best price and terms can be challenging.Allow us to lighten your load with a free, no-obligation consultation to help you secure the best financial terms when exploring assisted living communities. Plus, our assistance in helping you tour, choose, and move into your perfect senior living community comes at no cost to you!We are a Florida-based company with a specialized understanding of the Florida senior market. 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    Understanding your Social Security benefits

    When it comes to Social Security, there is a lot to consider. Social Security is often associated with a retirement program, but you may enroll if you become disabled or lose a family member. Take a look at the diagrams below for information on how to make the right choices for you and your family.When should I start collecting Social Security benefits?The answer is different for every person and depends on many individual factors like your date of birth, marital status and financial position. The longer you wait to start collecting Social Security, the higher your monthly benefit will be. An Ameriprise financial advisor can help you determine an appropriate time for you based on your financial situation and goals. Social Security benefits by ageWhat is my full retirement age?Your full Social Security retirement age depends on the year you were born. If you were born on January 1 of any year, refer to the previous year to determine your full retirement age.1  Year of birth  Retirement Age1943-195466 years old195566 +2 months years old195666 +4 months years old195766 +6 months years old195866 +8 months years old195966 +10 months years old196067 years old  How do my Social Security benefits change if I retire early or late?As life changes and priorities shift, you may wish to retire before or after your full retirement age. Your Ameriprise financial advisor can help you determine an appropriate choice for you. Retiring early locks you into lower monthly payments and will decrease your lifetime benefit amount. Retiring later increases your monthly payment and the amount you will receive over your lifetime.Comparing Social Security benefits by age Can I receive the Social Security benefits of my spouse?As the spouse of someone receiving benefits, you may be able to claim benefits based on their income, even if you have never worked under Social Security. You may be eligible for benefits if you are: Social Security benefits of a spouse Can I collect benefits on behalf of my child?You may be able to claim benefits if the child you are caring for fits the following criteria: Benefits on behalf of a child Can my children receive Social Security benefits?A child who has a parent who is disabled or retired and entitled to Social Security benefits may also be eligible for benefits if they are:   Am I eligible for survivors benefits?You may be eligible for survivor's benefits if you are: How does my military service or government employment affect my Social Security?As a veteran or government employee, your Social Security benefits may differ from others:   Can I still work and collect Social Security benefits?You can collect Social Security benefits while working, starting at age 62. However, your age and earnings may impact the amount of benefits you receive during that time. Working won't permanently reduce the Social Security benefits you receive, nor will your withheld benefits disappear.Once you reach full retirement age:Your monthly benefit will increase, taking into account prior benefits detained due to earnings.Extra income no longer decreases your benefits.If you work and collect Social Security when you are:   These types of income are exempt from the Social Security earning limit:Social Security income exemptions*If you work for someone else, only your wage amount applies to earnings limits. If you're self-employed, only your net earnings count. Does Social Security allow for inflation or cost of living increases?The Social Security Administration can enact yearly benefit increases called cost-of-living adjustments (COLA) based on inflation. Since 1975, COLAs have ranged from 14.3% (1980) to 0.0% (2009, 2010, 2015). Your financial advisor can help you identify other sources of income when Social security inflation adjustments are low.YearCost of Living Adjustment20228.7%20215.9%20201.3%20191.6%20182.8%20172.0%  When and how do I apply for Social Security?An Ameriprise financial advisor can help you navigate the process for Social Security. When to apply for Social SecurityYou can currently apply for Social Security in the following ways:Our advisors can helpIf you have any questions about Social Security, your Ameriprise financial advisor can help you understand all aspects of your benefits and help you live more confidently so if your life changes, your plan can too.

    Could the SSI "In-Kind Income" Definition Change?

    A newly proposed rule by the Social Security Administration (SSA) could ultimately change the way in-kind income is defined for recipients of Supplemental Security Income (SSI).What Is SSI?Supplemental Security Income (SSI) is a federal public benefits program that provides monthly payments to individuals with limited means, including people with disabilities and seniors. In many cases, recipients of this type of benefit automatically qualify for Medicaid as well.In 2023, the federal SSI payment standard is $914 per month for an individual ($1,371 per month for a couple).SSI Income GuidelinesIndividuals who receive SSI must meet very strict guidelines in order to continue qualifying for these public benefits.For people with disabilities, these guidelines include having an impairment that meets the SSAs narrow definition of disability as well as maintaining specific monthly limits on their assets and income.SSAs Definition of IncomeAs SSI support is intended for those with limited means, any additional income could potentially put an SSI recipients benefits in jeopardy.According to the SSA, income includes any item an individual receives in cash or in-kind that can be used to meet his or her need for food or shelter.An SSI recipient whose income exceeds their monthly SSI award even if it is unintentionally can result in the individual losing their benefits or having them lowered by a certain amount.Historically, SSA has included free food in its definition of income. SSI recipients must provide the SSA with details about their food expenses. A recipient who accepts so-called in-kind support and maintenance (ISM) in the form of food, such as a supply of groceries brought to the recipient by a family member or friend, generally will have their benefits reduced by about one-third.Fortunately for SSI recipients, this is something to which the SSA is now proposing a shift.Proposed RuleIn February 2023, the SSA announced its proposal to omit food from its calculations of ISM. If put into effect, Supplemental Security Income recipients who receive this type of support may no longer see their benefits shrink as a result. In addition, they would no longer need to report their food expenses to the SSA.The complexities of our current food ISM policies may outweigh their utility, the SSA states in its proposed rule. The current requirements for reporting in-kind food receipts could discourage SSI applicants and recipients from receiving an often informal but important form of help.In addition to simplifying reporting requirements for SSI recipients as well as processing time for the SSA, the SSA says the new rule would provide increased financial security to impacted beneficiaries; provide consistent treatment of food support regardless of source; and facilitate improved food security among beneficiaries.The SSA will be seeking public comments on this proposed rule up until April 17, 2023.Additional ResourcesTo learn more about these benefits, refer to this introduction to SSI, or consider consulting with a qualified special needs planner in your area.Contact Sharek Law Office at 412-347-1731 or click here to schedule a complimentary 15-Minute Call to learn how we can help. This article is a service of Sharek Law Office, LLC. We dont just draft documents; we ensure you make informed and empowered decisions about life and death, for yourself and the people you love. That's why we offer a Life and Legacy Planning Session, during which you will get more financially organized than youve ever been before, and make all the best choices for the people you love. You can begin by calling our office today to schedule a Life and Legacy Planning Session and mention this article to find out how to get this $750 session at no charge. Please note this is educational content only and is not intended to act as legal advice.

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    Siena Wealth Advisory Group

    Financial Advisor 999 Vanderbilt Beach Rd., Ste. 200, Naples, Florida, 34108

    At Siena Wealth Advisory Group we are passionate about helping you protect yourself and your family from the unexpected. That is why we take the time to get to know each and every one of our clients. We believe it is our duty, obligation and responsibility to help guide you to a more confident retirement. After all, you only get one retirement. We'll help you plan to get it right.At Siena Wealth Advisory Group it's not just financial planning, it's personal.