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This article brought to you courtesy of Matt Stutes, CFP, of Cornerstone Wealth Management, Canby Herald Financial Planning Insider.

Matt Stutes

The Social Security (SS) landscape continues to become more complex and ever changing. Below are three most common reasons social security benefits are different from what you thought.

1. Timing

Almost half of all workers eligible for SS claim their benefits at age 62. Age 62 is not full retirement age, but rather the earliest age that you are eligible to claim benefits. By claiming benefits before your full retirement age (FRA), you are locking in a reduced monthly benefit for the rest of your life.

2. Working in Retirement

Planning on claiming your SS benefit early and continuing to work? Not so fast, working while claiming your SS benefit before your FRA can reduce your benefit drastically. The reduction can be as great as $1 for every $2 in earned income. The limit for earned income before a reduction is $17,040.

However SS benefits can be claimed at FRA while continuing to work with no reduction to your benefits. Reductions will only apply to those who are still working and claiming benefits before their FRA.

3. Taxes

If income is being received from other sources besides social security, taxes may be owed on a portion of the SS benefit received. Income from other sources could include IRA distributions, 401K distributions, employment income, and some pension payments.

In 2018, for a couple who is married filing jointly with income between $32,000 and $44,000, up to 50 percent of their benefit may be taxable. For income above $44,000 up to 85 percent of eligible benefits may be taxable.

Matthew Stutes, CFP®

Cornerstone Wealth Management

486 NW 2nd Ave.

Canby, OR 97013


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