Key Points
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Social Security benefits are a critical source of income for many older Americans.
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If you’re 60, you’ll soon be eligible for retirement benefits and will have to make choices that affect your income.
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You’ll need to understand the types of Social Security benefits available and what affects your benefit amount.
When you’re 60 years old, you’re not quite at the age when you’re eligible for Social Security retirement benefits, but you’re getting close. Retirement is just around the corner, and the decisions you’ll make in the coming months and years will profoundly impact the income you have throughout the rest of your life.
Before you make any choices you regret, here are a few key things to know about Social Security at this phase of your life.
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1. Retirement benefits are just one of several kinds of Social Security benefits
One of the first and most important things to know is that Social Security retirement benefits are just one of the different kinds of Social Security checks you could claim. And focusing too much on retirement benefits could mean you miss out on other income.
For example, if your spouse has died, you may be eligible for survivor benefits starting at age 60. This is true even if you’re divorced, as long as your marriage lasted for at least a decade. In fact, you could get survivor benefits on a former spouse’s work history even if you have divorced and remarried, as long as you didn’t tie the knot again before age 60 (or age 50 if disabled).
Social Security Disability Insurance may also be available if you have a covered disability. If you’re forced to retire before full retirement age because of a disabling condition, it may be smart to see if you qualify for SSDI benefits based on your condition instead of claiming Social Security ASAP at 62. This could allow you to avoid taking the hit to your retirement benefits that comes with an early retirement claim.
Spousal benefits also become available at 62 and could entitle you to as much as half of your spouse’s primary insurance amount if you wait until your FRA to claim them. However, your spouse must have claimed their own retirement or disability benefits first.
You need to understand how all these benefits work and which you’re eligible for so you can make the most informed claim.
2. Your earnings record plays a major role in calculating benefits
If you’re claiming benefits based on your own work history, know that your earnings record plays a key role in determining how much you can collect.
Specifically, Social Security looks at your average wages over your 35 highest-earning years (after adjusting for inflation) and provides benefits equal to a specific percentage of those wages. This matters for a few reasons:
- First, if you’re earning a good living now and don’t have a 35-year earnings history with a decent income each year, you may want to work longer to replace some lower-earning years with higher ones.
- Second, you must check your earnings record to make sure it’s accurate. It’s available on your mySocialSecurity account. If it isn’t accurate, contact Social Security to correct it, because you don’t want a lower benefit due to a clerical error.
3. Your benefits may not replace as much income as you’d hoped
Finally, you should be aware that your benefits may not replace as much income as you expected.
Typically, benefits replace around 40% of preretirement income, but they replace even less for higher earners because the benefit formula is progressive. Ensure you have plenty of money in retirement plans to supplement your benefits before you quit your job for good.
By understanding these key facts, you can make informed choices about Social Security and set yourself on the path toward a more secure retirement.
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