No retirement planning conversation would be complete without a thorough discussion and understanding of a person or couple’s Social Security benefits.

The Social Security program went into effect on January 1, 1937.  At that time, life expectancy was age 60.  Many people at that time did not live long enough to collect their Social Security benefits.

With improved medical care, and healthier lifestyles, the average life expectancy today is age 78.  We now may live many years in retirement, and Social Security may be a big portion of our retirement income.  Choosing when and how to receive our benefit becomes a top priority.

Our Social Security benefit is calculated using an average of lifetime earnings, and the age at which we collect the benefit.  There is a minimum requirement of 40 quarters of work (10 years) and payment of Social Security taxes to be eligible for benefits (as an individual). The earliest possible date to collect Social Security benefits is age 62.  Full retirement age used to be age 65, however due to increased life expectancy, those born after 1943 will see a gradual increase in the full retirement age to age 67.

Individuals have many choices about how and when to take a Social Security benefit.  A person taking an early retirement benefit at age 62 will see a decrease of approximately 25% (from the full retirement age (FRA) benefit amount).

Postponing collecting Social Security benefits past full retirement age will increase the benefit payable by 8% per year (each year that you do not collect the benefit).  You may postpone your benefit until you reach age 70.

Spouses have many options for collecting Social Security benefits, and it is very important to review and analyze these choices before committing to a decision.  “Non-working spouses” (and I want to clarify this – this applies to those who do not work outside the home for pay.  I would never imply that a stay-at-home spouse or parent does not work!!) are entitled to apply for as much as 50% of their retired spouse’s full benefit amount.

There are also provisions for collecting Social Security benefits as a divorced spouse, if the marriage lasted at least ten years.  Certain conditions must be met for eligibility, and the benefit may be paid if the divorced spouse’s earnings record (and subsequently their benefit) is less than that of the ex-spouse’s benefit that they are applying to collect.

A person may receive a Social Security survivor benefit, if the person who is receiving Social Security dies.  Widows and widowers at their full retirement age may collect 100 percent of their deceased spouses benefit, if it is higher than their own (they will not collect two benefits, however – only the higher one).  Dependent children may receive a family benefit.

For many reasons, people often choose to work past the age of 65.  You may collect Social Security benefits while still working.  Keep in mind that there is a limit to how much you may earn before your Social Security benefit is reduced (if you are not yet of full retirement age).  After full retirement age, you may earn as much as you wish without reducing your benefit; however, depending upon your earnings, your Social Security benefit may be partially taxable.

There are so many strategies and options for determining when and how to take your Social Security benefit that it is impossible to cover them in one short article.  Information is available to review on the Social Security website,  where you may also set up your own individual account to view your earnings record and current benefit calculations.  I also would strongly suggest, if you are nearing retirement and considering starting your Social Security benefit, that you make an appointment to meet with a representative at your local Social Security office to review your benefits.


Article written by:  Mary Ann Pierce, CLU / Owner of Marathon Financial Advisors, Inc. Securities and investment advice offered through CADARET, GRANT & CO., INC. Member FINRA/SIPC  Marathon Financial Advisors, Inc. (formerly Susan Budrakey & Associates) and Cadaret, Grant & Co., Inc. are separate entities.