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One of The Most Critical Financial Decisions Impacting Your Retirement Lifestyle of No Regrets is when to begin Social Security. This 5 minute read will save you time and money and is part of the upcoming book, BE FIT FINANCIALLY, THE SECRETS TO IGNITE YOUR WEALTH, HEALTH & SUCCESS - YOUR GUIDE TO BEING A FINANCIALLY SAVVY & EMPOWERED WOMAN.

Retirement funds have lost a significant percentage of their value, leaving women in the latter years of their careers wondering how best to make up for lost income. Filing for Social Security benefits a few years early may seem like a good lifeline, especially if you’re age 62 to 66, which is just a few years away from full retirement age in the eyes of Uncle Sam.


Ladies, Social Security calculations are especially important for you, since women tend to live longer and therefore will rely more heavily on Social Security in the later years. You know all those gender-based “gaps” we talk about — the pay gap, the wealth gap, the widow gap and the caregiver gap? All of those financial gaps impact women and how much we get in Social Security earnings.


1. 2/3 of recipients are relying on Social Security for over 50% of their income, thus the importance of Retirement Planning. 2. The proportion of women among retired-worker beneficiaries quadrupled between 1940 and 2019, according to SSA data. In 2019, 55% of Social Security beneficiaries were women, with nearly 70% of them receiving worker benefits based on their earnings and 12% receiving survivor benefits.


One of the most critical financial decisions of your life is when to claim Social Security. What you decide to do in your early 60s will impact your retirement security for decades. We’re talking about having a lot less income in your 80s, 90s, and even your 100th birthday. You could sacrifice up to 30% per month in income if you claim at age 62. The decision to claim early is often regretted by women in their 80s and 90s. You can make up for career gaps. Many women move in and out of the paid workforce during their careers to raise children or care for loved ones such as parents, spouse or siblings.

The BIG Question you need to answer:

Is it worth it to claim early if you are going to lock in permanently reduced income for your entire retirement?


1. You need 35 years of work to get the best benefit amounts. Social Security uses your highest 35 years (they do not have to be consecutive years) of earnings to calculate your benefit. You want as many high-earnings years as possible, and they often come later in your career. Check your Social Security statement to see your work history and estimated benefit amounts. Use or call 1-800-772-1213 as your resource.

2. How much filing for Social Security benefits early will cost you? If you apply for Social Security when you first become eligible at 62, your benefit will be 70% to 75% of your Primary Insurance Amount (PIA- Full Retirement Benefit), depending on your birth year. As an example, if Susan C-Suite, whose PIA is $3,142, applies in 2020 when she turns 62, her monthly benefit will be 71.67% of her PIA or $2,252 for the rest of her life, increased only by annual COLA’s (cost of living adjustments) and maybe additional earnings, if you keep working.

Starting in January, the government will adjust Social Security benefits for 2021 based on the cost of living. You can do better. Congratulations, Social Security recipients: You’re getting a raise! It’s not much — in fact, it’s just 1.3%. And it’s not really a raise, per se, but an adjustment based on the cost of living.

3. You’ll get more money if you can wait to claim after your “Full Retirement Age.” The Full Retirement Age (FRA) is the age at which you qualify for the optimal Social Security monthly payment. If you’re born in 1955 or later, your FRA is between 66 and 67. Those born 1960 and beyond the FRA is 5. However, if you can wait longer to claim your benefit, you qualify for a higher payment — up to 8% per year more. A bigger check can make your 80s and 90s more financially comfortable.

4. If you get rehired, benefits may be withheld. You can collect Social Security and work at the same time. However, some of your benefits may be withheld which is called the earnings test. In 2020, the earnings test amount is $18,240 per year, or $1,520 per month. For every $2 you earn over the earnings test amount, $1 in benefits will be withheld. In the year you turn Full Retirement Age (FRA), the earnings test threshold is higher ($48,600 in 2020). One dollar in benefits will be withheld for every $3 you earn over the threshold amount. The earnings test applies to spousal and survivor benefits as well as earned benefits.

5. It’s challenging to undo an early claim. There are only two ways to undo an early claim. And they are generally too costly for most women. One option is the “do-over.” It must be done within the first 12 months of receiving benefits. You ask Social Security to stop payments and you must pay back 100% of the money you’ve received. Later, generally at FRA or later, you file for benefits as if you never made that early claim.

6. The other option is to suspend your reduced benefit payments when you reach your Full Retirement Age. The idea here is that you put your payments on hold for an additional one to three years. The lower payment amount will be increased up to 8% per year up until age 70. Then, you restart payments at age 70 at a significantly higher monthly payment than you were receiving when you claimed early.

7. Your Social Security benefits may be taxable depending on how much other income you have. Here, we are not just talking about earned income but also income from pensions, investments, and even tax-free income from municipal bonds. If your modified adjusted gross income, plus one-half of your combined Social Security benefits, plus any tax-exempt interest you receive - called your combined income - is between $25,000 and $34,000 for those filing as an individual, or between $32,000 and $44,000 for those filing a joint return, up to 50% of your benefits may be taxed. These threshold amounts were set in 1983 and are not adjusted for inflation!

If you have to borrow or take a hardship withdrawal from your workplace retirement account, the new rules of retirement withdrawals do away with early withdrawal penalties (in 2020), help mitigate or completely eliminate taxes and let you access up to 100% of your savings. And, as always, you can tap into your Roth IRA contributions without paying any penalties or taxes as long as you’ve had the Roth IRA for five years.

THE BOTTOM LINE: Do your research about Social Security and the consequences of claiming early and make the best decisions you can for the near-term while keeping an eye on the long-term.

MICHELE VON HOVEN IS A RETIREMENT INCOME CERTIFIED PROFESSIONAL, RICP, & EBW CERTIFIED MONEY MENTOR, with over 25 years of expertise and is available to help you sort through the retirement challenges with time saving strategies and solutions. We guide you by measuring your current financial results, so you can set realistic values- based goals and scale your finances on a sensible, achievable timeline.  We are Empowering Women to BE FIT FINANCIALLY, SECURE & CONFIDENT. Please contact me if I may be of service to you!

Michele @ SUBSCRIBE: Be to get the latest money strategies and solutions for your Pre & Post Retirement of No Regrets!

BFF, LLC is an independent organization providing unique, un-biased and non-judgemental insight into critical FINANCIAL issues facing WOMEN PRE-RETIREES & RETIREES.

Advisory Services offered through PMG,LLC, a Registered Investment Advisor

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