Social Security

Understanding your social security benefits – when to take them, how to take them, and how they will affect your taxes in retirement is a critical component of your retirement planning.

Social Security FAQ

What is FRA?

FRA is an acronym for Full Retierment Age.  Depending on when you were born, your FRA is between 66 and 67.  You can claim benefits as early as age 62, but you will receive approximately 7% less per month for every year you take your benifit early.  In other words, taking your benefit at age 62 vs. age 66 will give you  25-30% less income each month for life.  On the other hand, if you can afford to wait past your FRA, you’ll get 8% more income for every year that you wait–for life!  Where else can you get a risk-free 8% return every year?

Will my social security be taxed?

If your only source of income will be social security, you will not be taxed.  If you have other sources of income, then up to 85% of your benefit will be taxed.  The Provisional Income calcuation is used to determine how much of your benefit will be taxed.

How do I calculate provisional income?

Provisional income is defined as all of your current annual income from all sources (including rental properties and tax-free municipal bonds) plus 1/2 of your social security benefit.  If  your provisional income is above $34,000 (filing single) or $44,000 (filing jointly), up to 85% of your social security will be taxed.  You can use this handy calculator to see exactly how much the IRS will collect. 

Will I still get social security if I didn’t work?

Even if you didn’t earn wages and therefore didn’t pay FICA, you can still collect the equivalent of 1/2 of your spouses benefit if you wait until you turn 62 and your spouse is claiming benefits. If you did work, but your benefit is less than 1/2 of your spouse’s benefit, then you will get your benefit plus a spousal allowance to bring your total benefit to 1/2 of your spouse’s benefit.  

If you are single and didn’t work and pay FICA, you’re out of luck.

Can I still use the “File and Restrict” strategy?

The most recent legislation did away with the popular file and restrict strategy. In order to use this strategy which restricts an application to spousal benefits only, your birthdate had to be before 1/2/1954. Anyone born on or after that date will not be eligible.

I’d like to know more!

Kopman Financial has partnered with AFEA to offer workshops that will teach you when and how to take your social security benefits along with how social security will affect your taxes in retirement.  

Who is AFEA?  AFEA is comprised of a very diverse and growing membership of licensed professionals. AFEA members work as attorneys, financial advisors, realtors, mortgage specialists, insurance and investment specialists, CPA’s, health & wellness specialists, and a variety of other professions.

AFEA’s unique “No Selling” approach, coupled with strategic alliances will change the way you think about financial education!  AFEA members all share the same goal, and as an IRS approved 501(c)(3) non-profit organization, AFEA’s mission is to inform and empower Americans to take control of their finances by providing comprehensive financial education in communities nationwide.

AFEA financial education is delivered in a variety of formats including:

  • Classroom style at local community centers and colleges
  • In public libraries
  • Onsite in businesses or religious facilities

 

  The National Academy of Social Insurance (NASI)

 The National Academy of Social Insurance is a nonprofit, nonpartisan organization made up of the nation’s leading experts on social insurance. Its mission is to advance solutions to challenges facing the nation by increasing public understanding of how social insurance contributes to economic security.

Social insurance encompasses broad-based systems that help workers and their families pool risks to avoid loss of income due to retirement, death, disability, or unemployment, and to ensure access to health care.  More info about NASI:  https://www.nasi.org/

 

Get In Touch

Kopman Financial

8901 E. mountain view rd. #110  Scottsdale, AZ 85254
480 991 2815
info@kopmanfinancial.com

Rob Kopman, Principal
rob@kopmanfinancial.com
Cell: 480 991 2815