Social Security Insights for Your Financial Wellness

The CU Anschutz Health and Wellness Center (AHWC) and Canvas Credit Union have teamed up to offer a series of free financial wellness seminars to our campus community. If you couldn’t attend our recent workshop on Social Security, we’ve compiled a list of insightful did-you-knows and lesser-known facts (and tricks) shared by Canvas Credit Union’s financial experts.

Did You Know These Social Security Facts?

Social Security Statements Frequency:

The Social Security Administration only sends out personalized statements every ten years. Want to check yours sooner? To access your statement sooner, visit the official Social Security website.

Credit Requirements:

To qualify for Social Security, most workers need 40 credits, earned over roughly ten years. You can earn up to four credits each year, and in 2023, you needed to earn $6,560 to receive all four credits.

Highest 35 Years Rule

Your Social Security benefit is calculated based on your highest 35 earning years, not your most recent 35.  This means part-time work won’t automatically lower your benefits if you have enough high-earning years.

Watch Out for Zero-Income Years:

Years with no income mean zeroes in your earnings record, which can significantly reduce your future benefits. Check your earnings history to make sure everything is accurate.

Claiming Early:

If you claim Social Security before your full retirement age (typically 66 or 67), your monthly benefit will be reduced by as much as 25% if you claim at age 62. It’s worth thinking long-term!

Delayed Benefits Add Up:

If you delay claiming benefits past full retirement age, your payout grows by 8% each year! The longer you wait (up to age 70), the bigger the monthly check.

IRS Reporting and Earnings Thresholds:

Social Security receives your income information from the IRS annually. Exceeding the income threshold could mean paying back overpaid benefits if you don’t self-report.

Tax-Free Benefits Threshold

If you’re single or head of household and earn less than $25,000, your Social Security benefits are not taxed. For couples, the tax-free limit for combined income is $32,000.

Income Sources Can Increase Taxes on Benefits

Retirement income sources like 401(k)s, 403(b)s, or 457 plans are taxable and can push you into a higher bracket, affecting Social Security benefit taxation.

Federal vs. State Taxation:

While federal taxes on Social Security are universal, not all states tax these benefits. Some offer special exemptions, so it’s worth checking your state’s rules!

Eligibility for Spousal Benefits:

If you’ve been married for a year, or if you have a joint child, you’re eligible to claim spousal benefits, which can significantly supplement your retirement income.

Couples Can Maximize Combined Benefits

If both spouses qualify for benefits, they can choose between their own or their spouse’s record, potentially creating a combined benefit that’s higher than either individual amount.

Survivor Benefits Start Early but Are Reduced 

Widows and widowers can start receiving benefits at age 60, but early claiming reduces benefits. Switching to your own benefit later can help increase lifetime benefits.

Divorce and Benefits:

If you were married for at least 10 years and are currently unmarried, you may be eligible for spousal benefits from an ex-spouse’s record at age 62 or later—an essential resource for some retirees.

What to Do Next: Take Charge of Your Financial Future!

Do Your Research:

Dive deeper into Social Security and retirement planning to understand what options best suit your goals.

Talk to Your Financial Advisors:

A trusted advisor can help you navigate these complexities and make the best decisions for your future.