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      Wealth Management Insights

      Browse even more educational content on all things wealth management.

      Wealth Management Insights April 21, 2025

      4 Social Security Facts You Should Know

      More than 72 million Americans (21 percent of the U.S. population) receive some form of Social Security. This public insurance program has helped lay the economic foundation for Americans for more than 80 years, providing support to retirees and others.123

      Today, Social Security benefits represent, on average, almost a third of retirees’ income. Nearly 90 percent of Americans aged 65 or older receive some type of Social Security benefit.4

       

      Here are four important facts you should know about your Social Security benefits:

       

      Fact #1: Your Benefit Amount Depends on Your Retirement Age

      Your benefit amount varies depending on when you apply for benefits. You may file to claim benefits before your full retirement age. The earliest you can claim benefits is at 62, and you will not receive any additional benefits for delaying past the age of 70. If you claim benefits prior to reaching your full retirement age, the SSA will reduce your benefit amount by a certain percentage for each month prior to your full retirement age. For example, if you were born in 1960 and retire at 62, you’ll get 70 percent of your monthly benefits. If you retire at 65, you’ll get 86.7 percent of your benefits.5

      Full retirement age is 67 for those born in 1960 or later. If a retiree claims benefits prior to their full retirement age, their benefits will be permanently reduced. The full retirement age is the age at which recipients can receive their full benefits (or 100 percent of their calculated benefits).6

      Benefits will increase by 8 percent per year for those who decide to delay collecting Social Security beyond their full retirement age. Recipients who wait until they’re 70 to collect benefits will receive 24 percent higher payments than those who retire immediately after hitting the full retirement age.78

      Both choices (retiring early at 62 or delaying until the age of 70) have advantages and disadvantages.9

       

      Fact #2: You May Work and Collect Social Security Benefits

      The SSA acquires information, such as your bank account and routing numbers, from you during the initial application process. You’re required to provide the SSA with outside earnings estimates for the upcoming year.

      The SSA obtains your outside earnings from the W-2 forms your employer files or your self-employment income on tax returns to verify your income and gauge your benefit amounts. Social Security benefits are based on the projected income levels you report at the beginning of the year. The SSA will inform you if your benefits must be adjusted based on outside earnings. The SSA sets outside earning limits for recipients who receive benefits. If you exceed these limits, the SSA will reduce your Social Security benefits. The limit on outside earnings for 2025 is $23,400.5

      The SSA will deduct $1 in benefits for every $2 you earn above the outside income limit if you’re working and collecting Social Security prior to your full retirement age. In the year you reach full retirement age, the SSA will subtract $1 in benefits for every $3 you earn above $62,160. However, this deduction will apply only in the months of the year prior to the month you reach full retirement age.5

      The SSA will no longer penalize your outside earnings beginning the month you reach full retirement age. This year’s outside income limit of $62,160 represents an increase from 2024’s limit of $59,520.5

       

      Fact #3: Your Social Security Benefits Are Subject to Income Taxes

      You may still have to pay taxes on your Social Security benefits. However, taxes are capped at 85 percent of benefits.11

      The SSA requires a recipient to pay taxes if they file returns as an individual and their combined income is more than $25,000. Joint filers who are married are required to pay taxes if their combined income is more than $32,000. Married Social Security recipients who file separate returns may still have to pay taxes on their benefits.11

      If you file a return as an individual and your combined income is $25,000–$34,000, you may have to pay income tax on up to 50 percent of your Social Security benefits. You can calculate your combined income by adding together your adjusted gross income, your nontaxable interest, and half of your Social Security benefits.11

      Up to 85 percent of your benefits are taxable if you file as an individual and if your combined income exceeds $34,000.

      Up to 50 percent of joint filers’ benefits are taxable if their combined income is $32,000–$44,000. If their combined income is more than $44,000, 85 percent of their benefits are taxable.

       

      Fact #4: Married Couples Get Spousal and Survivor Benefits

      Social Security benefits for married couples work differently. Here are five important facts to consider:12 13 14

      1. Your current marital status doesn’t affect your eligibility for Social Security benefits. If you’ve worked for at least 10 years and earned at least 40 work credits, you can receive benefits.

      2. The SSA doesn’t penalize married couples or restrict their benefits. Spouses receive benefits based on their own work histories.

      3. If you’re eligible to receive one of two benefits, you will receive the higher one. Lower-paid spouses are eligible for either benefits based on their own work histories or spousal benefits based on their partners’ records. Lower-paid spouses are eligible to receive up to half their partner's benefits.

      4. Divorced spouses who were married for at least 10 years are eligible for higher benefits based on the records of their partners. Divorce decrees relinquishing one's rights to a former partner’s benefits are not binding.

      5. Widowed Social Security recipients are eligible to receive widow benefits. Widows may receive between 71.5 and 100 percent of their spouses’ benefits, depending on their specific circumstances.

       

      Conclusion

      Developing a strategy with an understanding of how to optimize your Social Security may put you in a better position when you start to draw your benefits. Work with Old National Wealth Advisors to find solutions designed to fit your retirement lifestyle.

       

       

      These are the views of FMG Suite, LLC, and not necessarily those of the named representative, broker/dealer or investment advisor, and should not be construed as investment advice. Neither the named representative nor the named broker/dealer or investment advisor gives tax or legal advice. All information is believed to be from reliable sources; however, we make no representation as to its completeness or accuracy. Please consult your financial professional for further information.

      1. SSA.gov, 2024
      2. Census.gov, 2024
      3. SSA.gov, 2024
      4. SSA.gov, 2024
      5. SSA.gov, 2024
      6. SSA.gov, 2024
      7. Investopedia.com, August 7, 2024
      8. SSA.gov, 2024
      9. SSA.gov, 2024
      10. SSA.gov, 2024
      11. SSA.gov, 2024
      12. SSA.gov, 2024
      13. SSA.gov, 2024
      14. SSA.gov, 2024

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