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Social Security retirement benefit rules to know

Keep these in mind when planning when and how to claim

Published: February 19, 2015 01:30 PM

Social Security retirement benefit rules are complicated and exhaustive. Below are a few key ones to consider. Check with the Social Security Administration for a more complete discussion.

  • The portion of your Social Security income that’s subject to federal income tax is based on your “combined income”: adjusted gross income plus nontaxable interest plus half of your Social Security benefits.
  • You qualify for Social Security retirement benefits by working and paying Social Security taxes for at least 10 years, and earning 40 “retirement credits.” In 2015, each $1,220 you make equals one credit. You can accrue only four credits per year.
  • To determine your retirement benefit, Social Security looks at your 35 highest-earning years, indexed for inflation. If you worked less than 35 years, those years of zero income are added into the calculation. In general, work for which you didn’t pay Social Security taxes isn’t counted.
  • If you’re entitled to two benefits, you’ll only get the one that pays more. Most working women who reach retirement age will get more from their own retirement benefit than from a spousal benefit.
  • You can claim Social Security retirement benefits as early as age 62. For every year after full retirement age that you delay claiming, your monthly check rises permanently by about 8 percent. It stops rising when you reach age 70.

Read about 7 Social Security pitfalls and windfalls. And check our Retirement Planning Guide for advice on making your second act fulfilling and financially secure.

Editor's Note:

This article also appeared in the February 2015 issue of Consumer Reports Money Adviser.

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