Social Security for Military Veterans: Planning for Retirement

When it comes to timing your retirement and when to begin receiving your Social Security benefits, there is no “one-size-fits-all” solution. These important decisions depend on a number of factors related to your circumstances and objectives. The Social Security Administration is a good place to start. By establishing an online account, you can view your earnings statements, receive personalized estimates of future benefits based on your actual earnings and use a number of calculators to help you compare different scenarios.

When am I Eligible for Full Social Security Benefits?

The first requirement in becoming eligible for Social Security benefits is to earn 40 credits, which essentially means recording 40 quarters of earnings on which you paid Social Security taxes. The next requirement is reaching the age of eligibility. To slow the depletion of the Social Security Trust Fund, the 1983 Social Security Amendments raised the full retirement age (FRA), which is the age at which you are eligible to receive full Social Security benefits. For those born in 1960 or later, FRA is 67. But you don’t have to begin receiving Social Security at your full retirement age.  

At What Age Should I Begin Receiving My Social Security Benefits?

You can begin receiving your benefits as early as age 62, or as late as age 70.  However, if you elect to begin receiving them at 62, they will be approximately 30 percent lower every month than if you waited until your full retirement age. Conversely, if you defer receiving your benefits until age 70, your benefits will increase by about 8 percent for each year you delay past your full retirement age. To better compare these scenarios as you plan for when you will choose to begin receiving Social Security, check out the table below.

So, what does this all mean? When should you begin receiving your Social Security benefits? That depends on a host of factors, including what age you plan to retire, whether you are able to retire without Social Security income and even how your health may impact your life expectancy. A knowledgeable financial advisor can walk you through all of your options and help you make an informed decision that is aligned with your circumstances and objectives.

When considering taking Social Security benefits, ask yourself these questions:

Do you intend to keep working? If you haven’t reached full retirement age, this could limit the benefits you receive now. 

Do your family members typically live until an old age? If so, you may want to hold off on taking benefits.

How is your health? If it’s poor, you may want to opt for an earlier start date than someone in perfect health.

Do you have health insurance? Remember that Medicare normally doesn’t start until age 65.

Do you qualify to receive benefits as a widow, widower or surviving divorced spouse? You may have other options to consider.

Can you afford to wait beyond your full retirement age to receive benefits? If so, you may be eligible for delayed retirement credits, which could mean a higher benefit.

Do you have family members that qualify for benefits on your record? Your decisions may affect them.

Do Military Retirees Get Social Security?

Military retirees can get both Social Security benefits and military retirement benefits. Generally, there is no reduction of Social Security benefits because of your military retirement benefits. You’ll get your Social Security benefit based on your earnings and the age you choose to start receiving benefits.

In addition to retirement benefits, the Social Security Administration pays benefits to the surviving family members of military service members who die. Service members can also receive benefits for themselves and their families if they develop a disability.  

Special Extra Earnings for Military Service

Under certain circumstances, special extra earnings for periods of active duty or active duty training from 1957 through 2001 can also be credited to your Social Security earnings record. These extra earnings may help you become eligible for Social Security or increase the amount of your Social Security benefit.

How Much Money Will You Need in Retirement?

Deciding when to begin receiving your Social Security benefits is typically part of a larger decision about when to retire. Making that decision may depend on how much you will need to live on in retirement. For many years, the conventional wisdom was that people would only need only 70 to 80 percent of their pre-retirement income in retirement. But that may no longer be a reliable rule of thumb in a time when many people are living longer, more active lives. While it’s true that some of the expenses associated with working won’t carry over into retirement, they may be more than offset by the expenses associated with having more free time and a desire to fill it with new hobbies and adventures. At the very least, it seems prudent to plan on needing closer to 100 percent of your pre-retirement income. 

How Will My Social Security Benefits be Impacted if I Choose to Keep Working?

Another emerging trend is the sizeable portion of seniors who don’t want to quit working or want to work part-time as a way of staying more engaged or giving back to their community. This is a viable option, but you’ll need to plan for the fact that your benefits will be temporarily reduced by $1 for every $2 you earn over the stated earnings limit, which is $22,320 for 2024.¹ This reduction only applies before you reach full retirement age, at which point the benefit is recalculated to adjust for the time when your benefits were reduced. 

Build a Comprehensive Retirement Income Plan

It’s important to remember that your estimated Social Security benefits are just that—an estimate—based on many factors, including potential earnings changes and adjustments due to cost of living increases. In addition, they are based on current law, which is subject to change. Reserves that help fund the program are projected to be exhausted by 2035, which has caused warning bells to ring for years. Even if that does happen, though, because Social Security is largely designed to transfer wealth from those in the workforce to retirees, it’s estimated there will be enough money available to continue to pay 79 to 83 percent of benefits.²

Social Security is one important component to financing your retirement, but most people will need several sources of income to meet all their needs. To estimate how much you’ll need for retirement and to create a plan for it, contact a knowledgeable First Command Financial Advisor.

¹https://www.ssa.gov/cola/
²https://www.ssa.gov/OACT/TRSUM/index.html