Know Your Social Security Full Retirement Age
First things first:Determine your Social Security full retirement age. For people born between 1943 and 1954, full retirement age is 66. If your birthday falls between 1955 and 1959, it gradually climbs to 67. If you are born in 1960 or later, your full retirement age is 67.
You can claim your Social Security benefits a few years before or after your full retirement age, and your monthly benefit amount will vary as a result. More on that in a moment.
Early Benefits Can Still Pay Off
However, taking early benefits can still pay off despite the reduced monthly check. But youll want to be sure you budget for a reduced benefit.
No one can predict how long youll live, but if youre facing a potentially significant reduction in life expectancy and are short of income, taking Social Security early may be appropriate, Neiser says.
Married women are also good candidates for claiming early benefits because they are likely to outlive their husbands. Those widows then become eligible to receive the greater of either their benefit or their late husbands benefit.
However, this scenario works only if the husband does not claim his benefits early. By not claiming early benefits, the husband effectively increases the monthly benefit his wife eventually receives. So youll want to calculate how filing early will affect your spousal benefit here.
Full Retirement Age: Age 6567 Depending On Date Of Birth
Your full retirement age is determined by your day and year of birth, and it is the age in which you get your full amount of Social Security benefits. For every year you delay taking your benefits from full retirement age up until you turn 70, your benefit amount will increase by almost 8% a year. It is referred to as a delayed retirement credit. This increase can result in more lifetime income for you and your spouse. Even after factoring in a potential return on investment and the monthly benefits you could have received if you claimed early, there can still be a $50,000$100,000 increase in lifetime benefits by waiting until you are older.
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Claiming Social Security At Age 65
Those whose Full Retirement Age is 65 are already that age or older. For those born after 1955 and before 1960, Full Retirement Age is 66 and some months. By retiring at age 65, those beneficiaries lose at least 12 months worth of increases. For those born in 1960 or after, Full Retirement Age is 67, so they lose up to 24 months of increases if they retire at age 65.
Below, we show how a person born in 1960 and entitled to a full benefit of $2,500 could see his or her monthly benefit change based on claiming age:
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If youre about to retire, you may be wondering whether you should start claiming your hard-earned Social Security benefits now. Here are a few key factors to consider in making that decision.
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You Can Undo A Social Security Benefits Claiming Decision
There aren’t many times in life you can take a mulligan. But Social Security offers you the chance for a do-over. Let’s say you claimed your benefit, but regretted the decision and wished you had waited. Within the first 12 months of claiming Social Security benefits, you can withdraw the application. You will need to pay back all the benefits you received, including any spousal benefits based on your record. But you can later restart your Social Security benefits at the higher amount youll earn by waiting.
Early claimers have another opportunity for a do-over: They can choose to suspend their Social Security benefit at full retirement age. Say you took your benefit at age 62. Once you turn full retirement age, you can suspend your benefit. You don’t have to pay back what you have received, and your benefit will earn delayed retirement credits of 8% a year. Wait to restart your benefit at age 70, and your monthly payment will get up to a 32% boost — which could erase much of the reduction from claiming early.
Can You Collect Social Security At 62 And Still Work
Yes, you can begin collecting Social Security as early as age 62, and you can still work while you collect these benefits. However, there is a limit to the amount that you can make while receiving benefits. Most people working full time will earn more than the limit of $18,960, and their benefits will be reduced by $1 for every $2 that they earn over the limit. If working part-time or full-time and earning less than this limit, then there will be no reduction in benefits.
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At What Age Does Social Security Stop Coming Out Of Paycheck
This means that someone who earns $1,000,000 in 2021 stops contributing to the program on February 23. Most people make less than $142,800 per year, so they pay the 6.2 percent payroll tax on every paycheck in 2021. But those who make more than $142,800 don’t have to pay into the program once they hit that cap.
Tax Considerations For Social Security Benefits
How do these tax considerations affect when you should apply for Social Security benefits? At todays , they may not have much of an impact on most people. Still, tax rates and income thresholds can change, so its worth remembering that you will lose less of your Social Security to taxes if you are in a lower marginal tax bracket when you begin to collect.
You should also note that if you decide to return to work, even part-time, and arent yet at your FRA, your Social Security benefits may be temporarily reduced. The reduction is $1 for every $2 of earned income over $18,960 in 2021 . During the year when you reach your FRA, your benefits will be reduced by $1 for every $3 in income over $50,520 in 2021 until the month when you become fully eligible. That money isnt lost, however. The SSA will credit it to your record when you reach your FRA, resulting in a higher benefit.
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Working And Drawing Social Security At Age 64
If you go over the limit you can earn, does SSI take half of what you earn over the limit or half of your SSI benefits after you go over the limit? Example: You can earn $13,900 and your SSI check is $1150 per month, and you earn $23,900, do they take $5,000 — Social Security will keep $4970 of your Social Security benefits . This is $1 for every $2 you earn over the limit, right?HOW do they do this? Social Security will stop all payments from January 2010 to May 2010. These five months equal $4970 . Beginning in July 2010, you would receive your $1150 benefit for the rest of the year. In January 2011, they pay the May 2010 amount that is still due.The good thing, every year you work, Social Security will recalculate your benefit.. so you get an increase for working the additional years! It’s well worth it!If you work past full retirement age, age 66 for you, then you get FULL Social Security and FULL wages. It’s a win-win for you!If this doesn’t make sense, you can read more here on the
How Old Do You Have To Be To Take Social Security
An individual born in 1955 reaches full retirement age at 66 years and 2 months 1956 is 66 years and 4 months. You can take Social Security retirement as early as age 62. If you take Social Security retirement prior to your full retirement age, you incur penalties for your earned income if you earn in excess of $14,160.
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You Can Claim Social Security Benefits Earned By Your Ex
Just because you’re divorced doesn’t mean you’ve lost the ability to get a Social Security benefit based on your former spouse’s earnings. You can receive a benefit based on his or her record instead of a benefit based on your own work record if you were married at least 10 years, you are 62 or older, and you are single.
Like a regular spousal benefit, you can get up to 50% of an ex-spouse’s benefit — less if you claim before full retirement age. And the beauty of it is that your ex never needs to know because you apply for the benefit directly through the Social Security Administration. Taking a benefit on your ex-spouse’s record has no effect on his or her benefit or the benefit of your ex’s new spouse. And unlike a regular spousal benefit, if your ex qualifies for benefits but has yet to apply, you can still start collecting Social Security based on the ex’s record, though you must have been divorced for at least two years.
Note: Ex-spouses can also take a survivor benefit if their ex died after the divorce, and, like any survivor benefit, it will be worth up to 100% of what the ex-spouse received. If you remarry after age 60, you are still eligible for the survivor benefit.
A claiming strategy if youre divorced: Exes at full retirement age who were born on January 1, 1954, or earlier can apply to restrict their application to a spousal benefit while letting their own benefit grow.
Social Security Spousal Benefits
Social Security is a vital source of retirement income for most women. For this reason, it is important to understand how the spousal benefit works and how it can impact the amount of Social Security income you receive.
As a spouse, you can claim a Social Security benefit based on your own earnings record, or collect a spousal benefit in the amount of 50% of your spouses Social Security benefit, but not both. You are automatically entitled to receive whichever benefit provides you the higher monthly amount. In order to qualify for Social Security spousal benefits, you must be at least 62 years old and your spouse must also be collecting his or her own benefits. Additionally, if you are the higher earner, your spouse can apply to collect spousal benefits based on your work record. It is important to note that claiming a spousal benefit does not impact the benefit amount received by the worker whose earning record is being used.
Taking Benefits Early
- At age 65, you would receive 45.8% of your spouses benefit.
- At age 64, you would receive 41.7% of your spouses benefit.
- At age 63, you would receive 37.5% of your spouses benefit.
- At age 62, you would receive 35% of your spouses benefit.
Recent Changes to Claiming Strategies that Affect Spousal Benefits
Applying for Benefits
So To Speak
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How The Grids Work
Here is when your age matters. If the Social Security Administration decides your condition doesn’t meet a disability listing and you can’t do your past job, the SSA will refer to the “grid rules” to decide if you are disabled. The grids are a series of tables that take into account several factors before pointing to a finding of disabled or not disabled.
The grid is divided into tables based on exertional levels that is, what level of work an applicant’s RFC assessment states that an applicant can do. The different RFC levels are for work at the following levels:
Spousal Benefits For Divorced Spouses
If youre divorced, you may be eligible for spousal benefits based on your ex-spouses work record. The rules are much the same, plus:
- Your marriage must have lasted for at least 10 years.
- You must currently be unmarried.
If your former spouse hasnt filed for benefits yet, you can still file for spousal benefits if you have been divorced for at least two years.
If your ex-spouse is still living, in most cases you must be at least 62 years old and your spouse must be old enough to qualify for benefits.
If your ex-spouse has died, your benefits are similar to those of a widow or widower.
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What’s Full Retirement Age
Full retirement age is when you’re eligible to receive full Social Security benefits. Your full retirement age depends on your birth year: Under current law, if you were born in 1955 or later, your full retirement age can be anywhere between age 66 and 2 monthsall the way up to age 67 for those born after 1959. If you were born before 1955, you’ve already reached age 66 and full retirement age.
Retirement ages for full Social Security benefits
If you were born in
Your full retirement age is
1954 or earlier
How Does Working After Retirement Affect Your Benefits
Working after retirement is becoming more and more common. The average recipient of Social Security retirement benefits is only receiving $1,543 per month. One can quickly see why it often becomes necessary to continue working even when receiving benefits. Some people might continue to work their normal job when they choose to start receiving benefits. Others might decide to return to work at a part-time job. So, how does working affect the benefits that you will receive?
The main thing to understand here is that your benefits can be affected by earning additional income, particularly if you have not reached full retirement age. Those who choose to start their benefits early might not receive their full benefits if they are still working. In 2021, the Social Security earnings limit is $18,960 to still receive full benefits. This means that if you earn more than this amount from another source like a part-time job, then your benefits will be reduced. Your benefits will be reduced by $1 for every $2 that you earn above the limit.
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Timing And Your Health Coverage
Your health insurance coverage can also play a role in deciding when to claim Social Security benefits. Do you have a health savings account to which you would like to keep contributing? If so, note that if youre age 65 or older, then receiving Social Security benefits requires you to sign up for Medicare Part A, and once you sign up for Medicare Part A, youll no longer be allowed to add funds to your HSA.
The SSA also cautions that even if you delay receiving Social Security benefits until after age 65, you might still need to apply for Medicare benefits within three months of turning 65 to avoid paying higher premiums for life for Medicare Part B and Part D.
In 2022, the average monthly premium for Part D will be $33 per month versus $31.47 in 2021. If you enroll in a Medicare Advantage plan, the average monthly premium will be $19 per month in 2022 versus $21.22 in 2021. However, if you are still receiving health insurance from your or your spouses employer, you might not yet have to enroll in Medicare.
As of Oct. 16, 2021, Social Security offices are only open by appointment, and to get an appointment you need to be in a limited, critical situation. Most people will have to transact their business online, by phone, or through the mail.
Whats Full Retirement Age
Full retirement age is when youre eligible to receive full Social Security benefits. Your full retirement age depends on your birth year: Under current law, if you were born in 1951 or later, your full retirement age is now some point after age 65all the way up to age 67 for those born after 1959. If you were born before 1951, youve already reached age 66 and full retirement age.
Retirement ages for full Social Security benefits
If you were born in
Your full retirement age is
1950 or earlier
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What Is Full Retirement Age If You Were Born In 1964
Full retirement age used to be age 65 but has been gradually increasing in recent years and depends on the year that a person was born. Baby boomers were born from 1946 to 1964. Therefore, their full retirement age is as follows: Year of Birth / Full Retirement Age. 1943 to 1954: Age 66. 1955: Age 66 and 2 months.
When Is It Worthwhile To Continue Working While On Social Security For Higher Benefits
In the end, whether or how beneficial it is to continue to work while on Social Security in order to generate higher Social Security benefits in the future depends heavily on two factors: what income replacement tier the Social Security recipient will be in and what the existing earnings history already was . Similar to the consequences of retiring early , the consequences vary depending on where the individual is in the AIME calculation.
Special Rule As You Approach Full Retirement Age
If you are already receiving your retirement benefits, a special higher earnings limit applies in the calendar year you turn your full retirement age . If you will reach full retirement age in 2021, you can earn up to $4,210 per month without losing any of your benefits, up until the month you turn 66. But for every $3 you earn over that amount in any month, you will lose $1 in Social Security benefits. Beginning in the month you reach full retirement age, you become eligible to earn any amount without penalty.
If you are self-employed, you may receive full benefits for any month during this first year in which you did not perform what Social Security considers “substantial services.” The usual test for whether you worked substantial services is whether you worked in your business more than 45 hours during the month . In other words, if you work in your business more than 45 hours in a month, Social Security may reduce your benefit.