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Filing early or late can make a big difference

You don’t have to wait until full retirement age to start collecting benefits. In fact, you can file for Social Security as early as age 62, or you can choose to delay your benefits until age 70.

If you file early, your benefit will be reduced. Starting with your full benefit amount, your benefit is reduced by 6.7% for each year before full retirement age (up to three years), and 5% for each year beyond that. Conversely, if you choose to delay benefits, your monthly checks will increase by 8% for each year you decide to wait.

How to estimate your benefits before you retire

You can obtain your Social Security statement by creating an account at Your statement contains lots of valuable information, such as

  • Your estimated benefit amount at full retirement age.
  • Eligibility for benefits.
  • A detailed history of how much you’ve earned each year.
  • Estimates for disability and survivors’ benefits, should you need them.

Keep in mind that the figures in your statement are just estimates, and your eventual benefit amount could be quite different, especially if you’re relatively young now.

Benefits are protected from inflation

While Social Security isn’t designed to be anyone’s sole source of retirement income, it is indexed for inflation — meaning that, unlike most other retirement assets, your purchasing power will remain the same over time. You don’t need to worry about inflation — at least when it comes to your Social Security income. The system is designed so that, if goods and services eventually cost twice as much as they do today, you’ll receive double the Social Security.

Can you work and collect Social Security at the same time in 2016?

Sort of. There are three different categories of Social Security recipients, and there is a different “earnings test” for each.

For SS recipients who will not yet reach full retirement age in the 2016 calendar year, the first $15,720 in earnings is exempt. Beyond that amount, every $2 in earnings will reduce Social Security benefits by $1.
For SS recipients who will attain full retirement age during 2016, the first $41,880 is exempt, and the reduction is just $1 for every $3 in earnings beyond that. Plus, only the months before your birthday count toward the total.
Finally, SS recipients who work past full retirement age will experience no benefit reduction, no matter how much they earn. It’s also important to note that any reduction in benefits isn’t lost — rather, a reduction will increase your future benefit amount.

Source: Matthew Franke, The Motley Fool USA TODAY January 2, 2016

Freeman Owen, Jr - Host of "Safe Money Talk" on CBS Radio The Big Talker 1580AM

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