Although Social Security is entirely separate from your AT&T benefits, it will be a major part of your retirement plan. For most AT&T employees, Social Security will provide 25%-50% of their retirement income. Therefore, it’s important to understand how this federal program works.
However, claiming Social Security can be complex. There's no simple, one-size-fits-all answer when it comes to deciding when to claim. Your longevity, AT&T pension, AT&T 401(k) savings and any other sources of income become decisive factors.
For those in your 30s, 40s and 50s, you may not be spending much time thinking about that financial safety net you’re building for your retirement years. But Social Security will be there when you retire to provide a monthly income after you reach retirement age — no matter how long you live.
Therefore, without at least a basic understanding of the program, you may have difficulty planning for retirement and making some adjustments while you are still working and earning an income.
That’s why the more you know about Social Security, the more likely you'll be able to maximize the benefits you've earned over a lifetime of working.
Here are Social Security basics for AT&T employees:
When are you eligible?
To become eligible for benefits, you must have earned 40 “credits.” That is a minimum of 10 working years. You earn credits toward Social Security by working and paying taxes as directed by the Federal Insurance Contributions Act (FICA).
At what age can you claim Social Security benefits?
You can file for Social Security as early as age 62, but for a permanently reduced benefit. To receive the full amount of your benefit, you must claim Social Security at your full retirement age (FRA), which is 66 or 67 depending on the date of your birth.
However, every year you delay starting Social Security from age 62 up to age 70 entitles you to a higher benefit of up to 8% per year. A benefit at age 70 will be 76-77% higher than the payout if you start at age 62.
How is your Social Security benefit calculated?
The two factors that determine the size of your benefit:
- your 35 highest income years (inflation-adjusted)
- the age you claim
What is the difference between filing early and delaying?
If you take Social Security early, your benefit is permanently reduced for each month taken before your FRA. For example, if your FRA is age 66 but you claim Social Security at 62, then your benefit will be reduced by 25% (30% if your FRA is 67).
As individuals wait to file, they receive a delayed credit added to their benefit. After FRA, Social Security benefits increase 2/3% per month (8% per year) until age 70.
How do spousal benefits work?
Whether you have worked or not, you’re eligible for a spousal benefit if you are at least age 62 and your spouse has filed. The maximum amount of your spouse’s benefit that you can receive is 50% when you collect at your FRA or later.
Spousal benefits do not earn delayed credits, so there is no reason to defer beyond your FRA. You will only receive the greater between your benefit and your spousal benefit – not both. Further, only one spouse can claim spousal benefits.
Married couples may want to consider taking advantage of spousal benefits. A higher-earning spouse can delay and grow his or her benefit. Meanwhile, the lower-earning spouse can file early and then switch to the higher spousal benefit once the higher-earning spouse turns age 70.
How do survivor benefits work?
If your spouse passes away after at least nine months of marriage, you may be able to collect survivor benefits. You are eligible for survivor benefits as early as age 60. However, a reduction applies if you take benefits prior to your FRA.
Upon your FRA, your survivor benefit will equal your spouse’s actual benefits. Therefore, if your spouse delayed his or her benefit, your survivor benefit will have also increased. If your spouse passed before collecting benefits, you will receive 100% of your spouse’s benefit at your FRA.
You will receive either your individual benefit or your survivor benefit, whichever is greater. For example, let’s say you received $1,400 from your own benefit while your spouse received $1,600 before passing away. You will then only receive $1,600.
If you remarry before turning age 60, your entitlement to these benefits stop. Remarriage after age 60 does not affect your benefits.
How are benefits impacted by divorce?
If you are divorced, it is still possible to receive spousal or survivor benefits based on your ex-spouse’s work record, provided you had been married to that individual for at least 10 years and have not remarried.
You and your ex-spouse must be at least age 62 to be eligible for spousal benefits. If you have been divorced for at least two years, you are not required to wait until your ex-spouse files for you to begin collecting benefits.
How are benefits taxed?
Social Security may be subject to federal income tax depending on how much other income you earn. Up to 85% of your benefit can be taxable. Your other income includes your AT&T pension, AT&T 401(k) or IRA withdrawals, wages, dividends, etc.
Individuals with incomes greater than $25,000 and married couples who file jointly with incomes above $32,000 will need to pay taxes. Most states do not tax Social Security.
- $0-$25K: 0% of your benefits
- $25K-$34K: up 50% of your benefits
- Above $34K: up to 85% of your benefits
Married, joint filing:
- $0-$32K: 0% of your benefits
- $32K-$44K: up 50% of your benefits
- Above $44K: up to 85% of your benefits
How do work earnings impact benefits?
If you receive work earnings and Social Security income before the year you reach FRA, $1 is withheld for every $2 you earn above $18,240 (2020).
In the year you reach FRA, $1 withheld for every $3 earned above $48,600 (2020) until the month you reach FRA.
Once you reach FRA or older, you may keep all your benefits, no matter how much you earn.
What is the do-over?
A “do over” is allowed if you notify the Social Security Administration that you want to withdraw your application within 12 months of claiming benefits. You will have to pay back the benefits you’ve already received, but there are no penalties or interest on the amount repaid. Only one withdrawal request is permitted.
How can I check my benefit?
Knowing your benefit amount is crucial for retirement planning purposes. Go to ssa.gov and, if you have created a My Social Security account, log in and get a copy of your statement. If you haven’t set up your My Social Security account, simply visit www.socialsecurity.gov/myaccount and provide the necessary information.
Again, choosing when to file for Social Security takes careful planning and strategizing. As a major source of supplemental income to your pension and retirement savings, your benefit strategy should be put together with the help of an AT&T-experienced financial adviser.
Learn more about AT&T benefits by downloading the go-to retirement guide: The AT&T Employee’s Guide to Retirement. (CLICK THE BUTTON BELOW.) This interactive guide covers all AT&T benefits, with the goal of helping you make more informed retirement planning decisions.