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Social Security Q&A

Social Security has been around for a long time. But it's a lot more complicated than many people realize.

In fact, the choices you make regarding Social Security can have a big impact on the amount of benefits you receive. That's why it pays to understand the many decisions and options involved in Social Security benefits. Let's take a look at some common Social Security questions.

Q. At what age should I elect benefits?

A. This is the $64,000 question. In general, the longer you wait to begin to receive Social Security benefits (up to age 70), the greater your benefit amount. If you elect early benefits at age 62, there is a significant reduction in the benefit amount.

On the flip side, if you were born in or after 1943, there is an 8 percent annual increase in benefit payments for each year you wait to start payments from full retirement age (currently 66 – 67, based on when you were born) until age 70. If you don't need the benefit due to other income sources, this may be something to consider.

Social Security Full Retirement Age
Birth Year Age for Full Benefits Reduction for Benefits at Age 62
1937 or earlier 65 20.00%
1938 65 and 2 months 20.83%
1939 65 and 4 months 21.67%
1940 65 and 6 months 22.50%
1941 65 and 8 months 23.33%
1942 65 and 10 months 24.1.7%
1943-1954 66 25.00%
1955 66 and 2 months 25.83%
1956 66 and 4 months 26.67%
1957 66 and 6 months 27.50%
1958 66 and 8 months 28.33%
1959 66 and 10 months 29.17%
1960 and later 67 30.00%
Source: www.socialsecurity.gov/retire2/agereduction.htm

Q. How much will I receive from Social Security?

A. For someone earning $40,000 per year, Social Security may replace about 40 percent of their pre-retirement income. The rest of his or her retirement income must come from employer-sponsored retirement plans and personal savings.

The amount you'll receive will depend on many things, including your top 35 years of income earnings, when you choose to elect Social Security benefits, whether or not you work during retirement, what (if any) Social Security special provisions you choose and more. You can get an estimate of your benefits by visiting ssa.gov/estimator or calling the Social Security hotline at 1-800-772-1213.

Q. What if I work during retirement?

A. If you elect Social Security benefits before your full retirement age and choose to work during that time, be careful. Your Social Security benefits can be reduced if your wages from work exceed certain limits. Once you reach full retirement age, however, you'll receive your benefits with no limit on how much you can earn, if you choose to continue working.

Q. How do my Social Security decisions affect my spouse's benefits?

A. In general, if you're married (or divorced after being married 10 years or more and you aren't currently married to someone else) you are eligible to receive the higher of either your own Social Security benefit or one-half of your spouse's benefit (known as a spousal benefit). For one spouse to be eligible for the spousal benefit, the other spouse must have filed for their personal retirement benefit. A spouse with no earnings history typically needs to claim a spousal benefit. It may also be a good option if you have earned significantly less than your spouse.

Delaying Social Security can increase the benefits for a surviving spouse. Upon the death of one spouse, the widow or widower will normally receive the greater of their existing benefit or the deceased spouse's benefit. Some married couples may find it favorable for the spouse with the lower benefit to take their benefits early while delaying the benefits of the spouse with higher earnings.

Special provisions

How does an increase to your Social Security benefit sound? Many people aren't aware of it, but Social Security offers several provisions that can have a big impact on your overall financial plan for retirement. Make sure you look into these options:

  • Claim and Suspend Allows an individual who has attained full retirement age to claim, then suspend his or her benefit. When benefits are reinstated, he or she will receive a higher amount due to delayed retirement credits. While the benefit is suspended, a spouse can also collect the spousal benefit (one-half of their spouse's full retirement age benefit).
  • Claim Now, Claim More Later Allows a married individual at full retirement age to claim a spousal benefit (one-half of their spouse's full retirement age benefit), and then claim a higher personal benefit later, letting the couple collect a higher overall benefit. Both spouses must be eligible for and must claim benefits.
  • Do-Over Allows an individual to change his or her previous claiming decision. He or she must pay back any benefits already received, but the provision results in higher monthly payments beginning at a later date. Individuals get one Do-Over per lifetime and the decision must occur within 12 months of the initial decision to claim.

Understanding these provisions may help you increase your benefit.

Get an estimate

One of the most important things you can do from a retirement planning standpoint is to get an estimate of your Social Security benefits. Visit ssa.gov/estimator or call the Social Security hotline at 1-800-772-1213. Then talk with a financial professional about your personal situation. He or she can help you understand your options.

More from this issue of The Principal Retirement NewsletterSM:


This content is based upon reliable source material and is believed to be correct as of the time of creation; however, it is subject to change at any time without warning. The purpose is educational.

While this communication may be used to promote or market a transaction or an idea that is discussed in the publication, it is intended to provide general information about the subject matter covered and is provided with the understanding that none of the member companies of The Principal® are rendering legal, accounting, or tax advice. It is not a marketed opinion and may not be used to avoid penalties under the Internal Revenue Code. You should consult with appropriate counsel or other advisors on all matters pertaining to legal, tax, or accounting obligations and requirements.

Insurance products from the Principal Financial Group® are issued by Principal National Life Insurance Company (except in New York) and Principal Life Insurance Company. Plan administrative services are provided by Principal Life. Securities are offered through Princor Financial Services Corporation, 1-800-247-1737, Member SIPC. Princor®, Principal National and Principal Life are members of the Principal Financial Group® (The Principal®), Des Moines, IA 50392.

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