Planning for retirement is a big challenge – you need a comprehensive list of your expected expenses, plus a fairly accurate insight into your potential income. While everyone’s income sources will vary, Social Security retirement benefits are one of the most common ways Americans earn money after retirement.

When can you claim Social Security retirement benefits and how much will you receive? Let’s look at all of the details you need to know about Social Security benefits, plus three simple steps to claim your benefits.

When Can You Claim Social Security: An Overview of Social Security Retirement Benefits

when can you claim social security

As you get closer to retirement, understanding when you can claim Social Security benefits becomes more important. For some people, it may be absolutely critical – if you don’t have a retirement plan in place, your Social Security benefits may be all the income you have.

Before we dive into the specifics of claiming your benefits, let’s look at some of the key qualifications for receiving Social Security retirement benefits:

  • You earn credits toward your Social Security benefits as you work: The number of credits you need to earn depends on when you were born.
  • Your benefit amount is based on how much you earn while you work: The more you make over your lifetime, the more your benefits will be.
  • You can start receiving benefits after you turn 62, but you’ll make less: The full retirement amount is available after you turn 66 years and 8 months old.

If you decide to keep working after the full retirement age, you can increase your Social Security benefits. First, for every year you work beyond retirement age, you will have an additional year of earnings that can increase your benefits. Additionally, your benefit amount will increase by a certain amount from retirement age until you turn 70.

When Can You Claim Social Security: A Comprehensive Guide to Claiming Your Benefits

We know how overwhelming it can be to figure out your Social Security retirement benefits. Fortunately, you can claim your benefits in three simple steps.

1. Calculate Your Social Security Benefit Amount

When you can claim your Social Security retirement benefits depends on when you were born. The full retirement age varies for people born before 1960, though it’s generally in the range of 66 years and a few months old.

The Social Security Administration has a retirement benefit calculator you can use to calculate your expected benefit amount. We also recommend looking at the early or late retirement calculator if you want to see all of your options. When you’re ready, you can apply for benefits online.

2. Determine Whether You Qualify for Spousal Benefits

Depending on the state you live in, you may qualify for spousal benefits if you are married as well as if you are divorced. If you didn’t earn an income during your career, you can still qualify for spousal benefits – the most you can receive is half of your partner’s benefit amount.

There are strategies that can maximize your benefit amount – those tactics may include delaying benefits for as long as possible for both you and your spouse. There are also different calculations for spousal benefits if a working spouse passes.

3. Put Money Aside to Account for Taxes on Your Benefits

While the initial 15% of your Social Security retirement benefits are not taxed, the rest of your income may be taxable. This depends on how much you earn each year. Up to 85% of your benefits may be subject to taxation if you exceed the combined income limits set by the IRS.

The IRS uses a formula to determine whether you have to pay taxes on your benefits or not. The formula adds your adjusted gross income, nontaxable interest, and half of your Social Security Benefits. How much you are taxed depends on your income, as well.

When Can You Claim Social Security: How to Maximize Your Social Security Retirement Benefits

Both individuals and married couples have an opportunity to maximize their Social Security retirement benefits. The strategies and approaches are different, but each of these can either increase the amount you earn or reduce what you owe in taxes.

  • Wait until you’re 70 to collect benefits: You’ll receive 8% more in benefits each year. At the very least, try to avoid collecting benefits before the full retirement age.
  • Delay collecting benefits if you have a low-earning spouse: Increases the benefit amount your spouse receives if you were to die before them.
  • Invest your benefits in a tax-free account: Offers you an opportunity to reduce your combined income, which can reduce your tax liability.

A tax advisor or financial planner can help you optimize your tax savings and find ways to invest any disposable income you may have.

Want to know how you can optimize your Social Security benefits? Contact Mooney Lyons to have a financial planner walk you through your options.