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Pre-Retirement Perspectives on Social Security: What You Need to Know and Do Before You Apply

Steven Rinn, CFP®


An HBKS June 23 webinar hosted by Steven M. Rinn, CFP, Principal, Senior Financial Advisor, HBKS, with guest speaker Social Security Consultant John Johnston.

Social Security is funded through FICA (Federal Insurance Contributions Act) taxes you pay out of your paycheck, which is designed to cover Social Security benefits for retirees and survivors, and for disability insurance. FICA is a combination of 15.3 percent of your gross wages (half paid by you, half by your employer); 6.2 percent goes for Social Security, 1.45 percent for Medicare.

How you qualify for retirement benefits

  • By earning credits when you work and pay Social Security taxes
  • 10 years working or 40 credits (quarters worked) required, plus age 62 or older
  • In 2022, for every $1,510 you earn you earn one credit up to a maximum of 4 credits per year.

How your benefit is determined
Based on lifetime earnings adjusted for inflation:

  • Adjusted for changes in wage levels over time
  • The monthly average of your 35 highest earning years: average indexed (for inflation) monthly earnings
  • Then a benefit formula: 92 percent of first $1,024; 32 percent of amount over $1,024 up to 15% of earnings over $6,172.

Most common question about Social Security is “When should I start?”

  • At age 61 you receive 75 percent of the full retirement annual amount
  • Then increasing year by year up to 132 percent at age 70
  • When is it best to start taking Social Security? A personal choice.

Working while receiving Benefits

  • If you’re under full retirement age, you can earn $19,560 per year, and for every $2 over that, Social Security will withhold $1.
  • The year of your full retirement, you can earn up to $51,960 before the month of your full retirement age, and your monthly benefit is reduced by $1 for every $3 you earn.
  • The month of your full retirement and later, you can earn as much as you want without a benefit reduction.

Spousal benefits

  • Maximum spousal benefit is 50 percent of worker’s unreduced benefit.
  • If spousal benefit is less than half worker’s, the two will be combined to equal half of the worker’s.
  • Does not reduce the worker’s payment.
  • Not reduced for a spouse caring for the worker’s child younger than 16 or disabled.
  • Not payable until worker starts collecting their benefit, which could disincentivize the worker to delay taking benefits to a later age in order to get spousal benefit at some time the worker starts.

Divorced spousal benefits

  • Same as spousal if married for at least 10 years.
  • Ex-spouse can apply for benefit at age 62 even if worker is not yet collecting

Survivor benefits

  • At full retirement age, receives 100 percent of deceased worker’s benefit.
  • At age 60, 71.5 percent of deceased worker’s benefit, and increases each month survivor waits to start benefits, up to 100 percent at full retirement age.
  • Survivor can take deceased spouse’s retirement benefit as early as age 62, then switch to their own benefit level at full retirement age if their benefit is greater.

Auxiliary benefits for children

  • Can receive a benefit based on parent’s benefit if parent is disabled, retired or deceased.
  • Child must be unmarried, younger than 18; or 18 to 19 and a fulltime student up to grade 12; or 18 or older and disabled from a disability starting before age 22.
  • Lump sum death payment of $255 to surviving spouse or children.
  • Benefits for parents who were receiving at least half their support from a son or daughter now deceased.

Taxes on benefits

  • Filing an individual return and income is $25,000 to $34,00, might have to pay taxes on up to half the Social Security benefits.
  • Filing jointly and worker and spouse have a combined income of $32,000 to $44,000, might have to pay tax on up to 50 percent of benefits; more than $44,000, up to 85 percent of benefits could be taxable.
  • Can have Social Security withhold money from benefit payments to cover taxes.
  • Taking Traditional IRA draws could impact the Social Security tax picture by increasing income.

Answer every question on the Social Security application to maximize benefits.


Only five ways to get Medicare:

  • Age 65
  • After 24 months on Social Security disability
  • Has ALS,
  • Has chronic kidney failure
  • Has been exposed to certain environmental conditions

Automatically enrolled on 65th birthday.

A worker still working and getting employer health plan coverage based on current employment would take Medicare A, which is free, then enroll for full Medicate coverage when employer group health coverage ceases.

If coverage is not taken at age 65, will incur a 10 percent of Medicare cost penalty at later enrollment and can only enroll during enrollment period.

Part B Coverage: IRA withdrawals and other sources of income independent of Social Security can affect the Medicate Part B premium. To be covered at age 65, enroll one-to-three months before reaching age 65.

Something new: Effective March 2020, individuals who can’t manage their own benefits can designate someone as a representative payee.

How to apply for benefits?

  • Do it directly on the Social Security website for retirement, spouse, disability, or Medicare only.
  • Or typically for an unusual situation:Schedule a phone appointment at 800-772-1213 or Schedule in-office appointment at 800-772-1213.
  • Set up a “my Social Security” account at for better control over, knowledge of, and management of a Social Security account.


The information included in this document is for general, informational purposes only. It does not contain any investment advice and does not address any individual facts and circumstances. As such, it cannot be relied on as providing any investment advice. If you would like investment advice regarding your specific facts and circumstances, please contact a qualified financial advisor.

Any investment involves some degree of risk, and different types of investments involve varying degrees of risk, including loss of principal. It should not be assumed that future performance of any specific investment, strategy or allocation (including those recommended by HBKS® Wealth Advisors) will be profitable or equal to the corresponding indicated or intended results or performance level(s). Past performance of any security, indices, strategy or allocation may not be indicative of future results.

The historical and current information as to rules, laws, guidelines or benefits contained in this document is a summary of information obtained from or prepared by other sources. It has not been independently verified, but was obtained from sources believed to be reliable. HBKS® Wealth Advisors does not guarantee the accuracy of this information and does not assume liability for any errors in information obtained from or prepared by these other sources.

HBKS® Wealth Advisors is not a legal or accounting firm, and does not render legal, accounting or tax advice. You should contact an attorney or CPA if you wish to receive legal, accounting or tax advice.

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