Social Security is a key retirement asset you must understand

Social Security card on money

Social Security card on money

It depends on your age when you claim it.

Because of a data exchange established between Social Security and HUD, most people do not need to contact Social Security for a benefit verification letter. You'd also get four years of 8% delayed-retirement credits calculated on the $2,533 benefit.

QIf I take Social Security at age 62 and then pay back the benefits within 12 months to erase the penalty for claiming early, is it true I get to keep the interest I earned while I had the money? While usually referred to as "Social Security taxes" on an employee's pay statement, sometimes the deduction is labeled as "FICA" which stands for Federal Insurance Contributions Act, a reference to the original Social Security Act. The answer is no. This means they are filing for all possible benefits, which can not be separated. That's because at your full retirement age Social Security will recalculate your benefit amount to give you credit for the months in which benefits were reduced or withheld due to your excess earnings. At 62, this is 75 percent of what you would have received at age 66. In the year you turn 66, the amount you can earn is much more generous and the amount they withhold is much less. Instead of being 50 percent at age 66, they will use 35 percent because you are filing before full retirement age at 66. The longer you wait, the higher your monthly benefit will be, although it stops increasing at age 70. However, by filing early, you can never make up the difference.

However, for every month benefits are withheld, it increases your future benefits. They will always be deeming and filing for their own with a possible add-on for spousal benefits. In other words, you don't actually need to stop working to get your full benefits. Social Security's rules say that if you work and are receiving benefits but have not yet reached your full retirement age (which for you is 66) and you earn more than their annual earnings limit, they will "take back" half of everything you earn over the earnings limit (which for 2017 is $16,920). After you reach full retirement age of 66, there is no earnings test, so you can work and receive Social Security at the same time with no tax effect.

Here's an example worked up for us by Baylor University professor William Reichenstein, head of research for consulting firm Social Security Solutions.

Social Security is constantly evolving to make your life easier.

Gary Boatman is a Monessen-based certified financial planner and author of "Your Financial Compass: Safe passage through the turbulent waters of taxes, income planning and market volatility".

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