Social Security
A federal government program providing retirement, disability, and survivor benefits funded by payroll taxes, with benefits calculated based on earnings history and the age at which benefits are claimed.
Understanding Social Security
Full retirement age is 66-67 depending on birth year. Benefits can be claimed as early as 62 (at a permanent reduction) or delayed until 70 (for an 8% annual increase for each year of delay). Up to 85% of Social Security benefits can be taxable at the federal level depending on combined income. Managing other income sources to stay below Social Security tax thresholds is an important retirement planning consideration.
Why This Matters for Retirement: Understanding Social Security is essential for making informed decisions about tax-free retirement income strategies. Whether you are evaluating an IUL policy, planning Roth conversions, or comparing retirement vehicles, this concept directly affects your outcomes.