Social security looms for baby boomers

Social security looms for baby boomers

Posted: Wednesday, March 23, 2011 8:02 pm
By: Jason Alderman, Special to The Press

By Jason Alderman

Special to The Press

Talk about a stampede: The first wave of Baby Boomers begins turning 65 in 2011, which means they’ll soon be tapping Social Security retirement benefits, if they haven’t already. If you’re a Boomer and haven’t yet investigated how this program works, this may be a good time to learn the ropes. 

When you work and pay Social Security taxes, you earn up to four “credits” per year based on net income. In 2011, it takes $1,120 in income to earn one credit. You must accumulate at least 40 credits over your lifetime to qualify for a benefit; however, those who haven’t earned sufficient credits sometimes qualify based on their spouse’s work record. 

Retirement benefits are calculated based on earnings during 40 years of work. The five lowest-earning years are dropped and each year not worked counts as zero. 

“Full retirement age” increases gradually from 65 for those born before 1938 to 67 if born after 1959. 

If eligible, you may begin drawing benefits at 62; however, doing so may reduce your benefit by up to 30 percent. The percentage reduction gradually lessens as you approach full retirement age. Alternatively, if you postpone participating until after reaching full retirement age, your benefit increases by 7 to 8 percent per year, up to age 70. 

You can use the Retirement Planner tools at to estimate your retirement benefit under different earnings, age and life-expectancy scenarios. 

Spousal benefits also are available if you’re divorced, provided: your marriage lasted at least 10 years; you remained unmarried before age 60 (or that marriage also ended); and you’re at least 62.  And finally, although Social Security benefits aren’t taxed by many states, they are considered taxable income by the federal government. So, depending on your income, you may owe federal income tax on a portion of your benefit. 

For more details, read IRS Tax Topic 423 and Publication 915 at

wcp 3/22/11

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