Social Security: What to Expect From Uncle Sam

Social Security: What to Expect From Uncle Sam

In the future, you’ll have to work longer before you collect

A retiree would have a tough time surviving on Social Security benefits alone. The average annual Social Security benefit paid in 1994 was a meager $8,088. You can start taking benefits at age 62 but you’ll suffer a permanent 20 percent cut in benefits. If you wait until 65 or beyond, you could get up to several thousand dollars more a year.

Keep in mind that legal changes have extended the age at which people will start getting Social Security payments in the future.

The full retirement age will be increased in gradual steps. For example, benefits start at age 65 and two months for those born in 1958 and four months for those born in 1959, 65-and-a-half for those born in 1960, 65 and 8 months for those born in 1961, and 65 and 10 months for those born 1962. Those born between 1963 and 1973, will have to wait until they reach 66. The steps increase until those born in 1980 reach full retirement at age 67.

Probably what one gets crossing sunflowers and chamomilles (daisy, daisylike flowers). Photo by Elena

Working beyond your full retirement age can help you get higher Social Security payments because you’ll presumably be adding relatively high earnings to your Social Security records. Higher lifetime earnings mean higher benefits. On the other hand, working while you’re getting Social Security could lower your benefits. If you are 62 to 64, you could reduce your payments by $1 for every $2 you earn over the limit. If you are 65 to 69, your benefits are cut by $1 for every $3 you earn over the limit. Once you hit 70, your benefits can’t be cut, though, no matter how much you earn.

But benefits depend on your earnings history and that of your spouse’s, so you may want to call the Social Security Administration for a more accurate estimate. And who knows how Congress will tamper with your benefits? Under current law, if you receive income of addition to your Social Security benefits up to 85 percent of your benefits could be included in your taxable income. Congress has been tinkering with the amount subject to tax, and inevitably will do so again