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Social Security Basics

Social Security Basics

To be eligible for Social Security benefits, individuals must have earned 40 calendar quarters of wages that were subject to Social Security tax. The amount of the benefits you would receive at full retirement age (FRA) is based on the average of the 35 highest years of earnings.

What is full retirement age (FRA)?

Individuals also have the option of taking Social Security benefits before full retirement age at a reduced monthly amount. For example, if you were expecting $2,000 in monthly benefits at FRA, you would receive only 75% of your benefits if you chose to take Social Security at age 62. By waiting until age 70, you could receive $2,640, or 132% of your benefits.

When Should You Take Social Security?

What seems like a simple question may not have a simple answer. Taking benefits early may result in a substantial reduction in total Social Security benefits over the years.

Consider these factors. 

Do you need Social Security to fill an income gap?

Keep in mind that Social Security benefits are reduced permanently when you claim them prior to your full retirement age, which could decrease your overall lifetime Social Security benefit amount by up to 24%.

What’s your life expectancy and break-even age?

Health status, longevity, and retirement lifestyle are three variables that can play a role in your decision on when to claim your Social Security benefits. Estimate your own personal “break-even” age based on these types of variables, which will differ from person to person. 

Will you work during retirement?

Working individuals who take benefits prior to full retirement age may incur an earnings penalty whereby benefits are withheld when earnings exceed a specific amount ($18,960 in 2021).

Are you planning with a spouse?

For married couples who take early benefits, benefits are reduced for one of the spouses.

Can You Afford to Wait?

A hypothetical example of monthly benefits

*This hypothetical example assumes that the person is not working in retirement. Sample benefit amounts are not exact due to rounding. They do not reflect annual cost-of-living adjustments or taxes. Had taxes been taken into account, the amounts would be lower. Benefit at full retirement age (age 66) is assumed to be $2,000 per month. Source: Fidelity Investments.

For more information, Contact MCF today!

Hunter Nighbert

Financial Advisor



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1 Source: ssa.gov/benefits/retirement/learn  2 Source: AARP, Social Security Resource Center, December 2020. 3 Source: Social Security Administration, Fact Sheet, 2018




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