Factors that Affect your Social Security Benefits

Social security is a fundamental aspect in the lives of United States’ aging population. The poverty rate among the elderly would be out of control if the government did not supply these benefits. Almost 70% of individuals who receive social security funding are retired and the amount accounts for more than 50% of their total household income. The criteria for qualifying for social security benefits and the amount of money you are granted may vary from state to state. Disability Law Attorney in Lake Oswego reveals some basic factors that have a substantial impact on your social security benefits:

Employment History

The SSA (Social Security Administration) determines your retirement benefits by using your 35 highest earning (inflation adjusted) years in their calculations. This means the more years you worked, the greater will be your payout. People who have worked less than 35 years will be assigned $0 for every vacant year; this will naturally diminish your average. Similarly, the higher your annual incomes, the better are your chances at acquiring a handsome paycheck for your retirement days.

Total Income

Social security benefits are meant to support retired workers, irrespective of any supplementary forms of income at their disposal. Many individuals and couples do receive a cheque from SSA even if they earn decent money from a side business or investment. Your income does not affect the amount payable to you by social security, but it does impose additional taxes. The IRS taxes 50% of the benefits if an individual earns more than $25,000 per year or a couple together earns more than $32,000. If your average gross income exceeds $34,000 or the total income combined with your spouse’s is beyond $44,000 then 85% of your social security benefits are taxable.

Marital Status

Married couples may consider joint life expectancy to maximize their benefits. This works by taking full advantage of the highest earner in the household, as his/her income converts to survivor benefits. Spousal benefits are most favorable for homemakers or partners who have mostly worked for very low wages. The amount awarded through spousal benefit can add up to 50% of what the primary earner receives from social security. When one spouse dies, the survivor receives the higher of the two benefit amounts.

Retirement and Claiming Age

Your birth year is integral to SSA, as it determines your FRA (Full Retirement Age). The FRA in United States is between 65 and 67, but you can claim social security benefits by the age of 62. However, keep in mind that your benefits are permanently reduced if you withdraw them before the standard retirement age. People who claim their benefits after reaching their FRA are eligible for an amplified amount.

Moreover, the SSI penalizes benefits if you choose to work past the retirement age. Beneficiaries have to go through a ‘Retirement Earnings Test’ to determine if they are earning too much. The SSA may then withhold a portion of the benefits or even confiscate the entire amount under certain circumstances. Once you have hit your FRA and stop working, the withheld amount would be returned to you.

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