Mar 9, 2017 3 min read

Social Security is the retirement asset most people have, but many do not understand it as well as they think they do.

There are several different ways you can access Social Security during retirement.

Someone can have their own work record where they have contributed along with their employer during working years. When they reach age 62, they become eligible for a reduced income with earnings restrictions from current earned income. Some people could also be eligible for spousal benefits – when they can receive benefits from being married to someone who has an earning record with Social Security. The third way to receive retirement income from Social Security is to be a survivor of a spouse with benefits accrued who has passed away.

One question that is often asked is if someone can claim spousal benefits at 62 and then switch to their own full benefit at retirement age. The answer is no. When someone files for Social Security before full retirement (which is 66 for anyone born before 1954) they are considered to be deeming. This means they are filing for all possible benefits, which cannot be separated.

First, the Social Security Administration will calculate how much you would receive on your own work record. At 62, this is 75 percent of what you would have received at age 66.

Then they would determine if you would receive any more from spousal calculations. Instead of being 50 percent at age 66, they will use 35 percent because you are filing before full retirement age at 66. If this is higher than your own benefit calculations, they will add on the difference. However, by filing early, you can never make up the difference.

If someone was 63 by Jan. 1, 2017, they still have the right to file for restrictive benefits at full retirement age. This would allow them to collect spousal benefits and let their own continue to grow at 8 percent a year until age 70. Anyone who was not 63 by Jan. 1 will never be allowed to file for restrictive benefits because of a law change about 18 months ago. They will always be deeming and filing for their own with a possible add-on for spousal benefits.

If you filed before full retirement age and work, you are subject to the earnings test. This means for every $2 you earn above $15,480, you will have $1 reduced from your Social Security check. If you earn more than $48,960 you will not receive a check from Social Security. When you reach full retirement age at 66, your benefit will be recomputed to add back in the actuarial reduction for those months when your benefit was withheld. 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 consequence.

Social Security is too important of an asset not to understand. It can be complex and the Social Security office does not give advice on various strategies; they only answer basic questions. Attend Social Security workshops and talk to a knowledgeable professional before you make your decisions.

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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