Retired couple in thunderbirdFor most Americans, Social Security is essential for financial independence during retirement. However, some soon-to-be retirees who plan to draw Social Security aren’t fully aware of its financial scope and their rights under the Social Security Administration. Below are five points that all retirees should know.

1. Importance as a Source of Income

The importance of Social Security as retirement income depends on your personal financial situation. However, considering that Social Security permanently restores roughly 40% of an average worker’s yearly earnings during retirement, it is a primary source of income for most, not a secondary or tertiary stream of income that minimally impacts quality of life.

2. Choosing When to Use It

You are not locked into receiving Social Security after reaching a certain age. Although some retirees prefer to draw benefits as early as possible (at age 62) many wait until full retirement age when they will get higher payments due to receiving them over a shorter period of time. The Social Security Administration’s website provides a detailed explanation for understanding your Social Security benefits by retirement age.

3. Your Benefits May be Taxable

Understanding that Social Security benefits will be taxed if you earn enough income is essential for retirement planning. Taxation is determined based on your combined income, which is calculated by adding three figures together: your adjusted gross income, your nontaxable interest, and one-half of your total Social Security benefit. The Social Security Administration’s website also provides a breakdown of how taxes apply to Social Security benefits.

4. Your Benefits can Help Family

Certain family members of a beneficiary may be eligible for the benefits, too. Eligible family members include: a spouse age 62 or older, a spouse of any age who cares for a disabled child who is under 16, unmarried children who are under 18, unmarried children who are between 18 and 19 and are enrolled as full-time students in a secondary school, and children who are 18 or older and experience severe disability.

Any of these family members could qualify for monthly social security that does not exceed more than half of your benefit amount. The limit on benefits to family members is typically capped at between 150% and 180% of your social security benefit. The Social Security Administration’s website provides a breakdown of the Social Security family maximum.

5. Divorced Spouses May Qualify

Under certain conditions, you can qualify to receive Social Security benefits from an ex-spouse. To qualify, you are required to have been married to the person for at least 10 years, be divorced from the person for at least two years, be at least 62 years old and unmarried, and be ineligible to receive a higher Social Security benefit based on work history. In addition, your spouse must be an age at which he or she is can start receiving benefits.


The points above are essential for understanding social security in a way that helps you make informed financial plans for retirement. However, considering the tedious stipulations that commonly underpin matters of eligibility for Social Security, it is best to consult with an experienced retirement planner or one of Maxwell Locke & Ritter’s CPAs to gain an airtight understanding of how Social Security can benefit you and your family. With professional assistance, you can plan with peace of mind.

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