Thursday, June 16, 2022

Can I Draw Social Security At 60

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Social Security Benefits For Workers Turning 60 In 2020 Will Very Likely Drop Due To The Coronavirus Pandemic


Congress could pass legislation that would prevent this outcome.

As a result of the COVID-19 pandemic, about 3 million retired workers who turn 60 years old in 2020 will very likely have much lower lifetime Social Security benefits than previously expected. Without legislative changes, the average earner stands to lose nearly $1,500 per year for the rest of their life. Fortunately, there is a simple legislative changeexplored in detail belowthat would fix these problems without lowering the benefits of any other cohort of retirees. Chairman of the U.S. House Ways and Means Social Security Subcommittee, Rep. John Larson , has introduced such legislation*and Congress should fix this situation as soon as possible.

So How Much Less Might You Receive

As stated, the percent that the NAWI goes up or down in the year you turn 60 directly correlates to how your retirement benefit is calculated.

And, as a sobering example of the wage anomaly that is 2020, in April of this year, the Wharton School published a report, which, based on early 2020s wage numbers, showed that people born in 1960 could see a lifetime benefit reduction of around 13%.

Now, while hard to identify, if theres any wisp of optimism, its that the estimate of the wage index decline for the year has recently improved a bit.2 The current estimate 2 means that the corresponding calculation for reduced Social Security earnings for people turning 60 this year has improved to an 8.8% overall decline in payments.2

For you, Ruthie, if your income averaged $50,000 a year throughout your career, as of this moment, that decline amounts to a roughly $49,000 reduction in benefits over the likely duration of your post-work life.1

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.

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How To Use This Information

Each survivor’s situation is different. Talk to a Social Security representative before you decide to take benefits.

You cannot use the Retirement Estimator to determine benefit amounts for a surviving spouse. However, if you know what the worker’s yearly lifetime earnings were, you can use our Online Calculator to get a rough estimate of what the benefits would be for the surviving spouse at full retirement age.

If you know what the widow or widowers benefit is at full retirement age, you can use the information for the survivor’s year of birth to find out how much the widows or widowers benefit would be at various ages.

How Should I Decide When To Take Benefits

What You Need to Know About Social Security and Retirement ...

Consider the following factors as you decide when to take Social Security.

Your cash needs: If you’re contemplating early retirement and you have sufficient resources , you can be flexible about when to take Social Security benefits.

If you’ll need your Social Security benefits to make ends meet, you may have fewer options. If possible, you may want to consider postponing retirement or work part-time until you reach your full retirement ageor even longer so that you can maximize your benefits.

Your life expectancy and break-even age: Taking Social Security early reduces your benefits, but you’ll also receive monthly checks for a longer period of time. On the other hand, taking Social Security later results in fewer checks during your lifetime, but the credit for waiting means each check will be larger.

At what age will you break even and begin to come out ahead if you delay Social Security? The break-even age depends on the amount of your benefits and the assumptions you use to account for taxes and the opportunity cost of waiting . The SSA has several handy calculators you can use to estimate your own benefits.

If you think you’ll beat the average life expectancy, then waiting for a larger monthly check might be a good deal. On the other hand, if you’re in poor health or have reason to believe you won’t beat the average life expectancy, you might decide to take what you can while you can.

A quick note about life expectancy

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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.

What Are The Rules For Social Security Disability After Age 50

As a general rule, the older you are, the easier it is to get Social Security Disability Insurance benefits or Supplemental Security Income . That is because special Social Security Disability rules apply if you are over the age of 50, 55, or 60. Keep reading to learn more about how your age affects your SSDI or SSI claim.

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How Does Early Retirement Affect Social Security

Many adults look forward to retirement. And some wouldnt mind leaving the workforce ahead of schedule. But few people think about the drawbacks of retiring early. Few realize that an early retirement might affect their long-term financial plan and their access to certain benefits. A financial advisor can help you figure out all of your retirement and social security issues.

How Your Social Security Benefits Are Earned

ð´Can I Collect Social Security Spousal Benefits?

To be eligible for Social Security benefits in retirement, you must earn at least 40 “credits” throughout your career. You can earn as many as four credits each year, so it takes 10 years of work to qualify for Social Security.

In 2021, you must earn $1,470 to get one Social Security work credit and $5,880 to get the maximum four credits for the year.

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What Happens To A Persons Social Security When They Die

As long as you remain alive, you continue drawing benefits based on your work record and how much youve earned over your lifetime. When you die, the benefits cease there is no accrued balance that is paid out to your estate or to your survivors. Social Security does not pay benefits for the month of your death.

How Disability Benefits Differ

Social Security Disability Insurance benefits are for people who are eligible for Social Security retirement benefits, but became disabled before they reached full retirement age. When a beneficiary begins to receive disability benefits, certain members of their family may also qualify for benefits, including:

  • spouse

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Just How Rare Are Nawi Declines

In the last 70 years of Social Security payments, a wage index decline has only happened once . But that decline was so inconsequential , that Congress didnt see any reason to act.

If the current decline in the NAWI remains the same for the remainder of 2020, Congress will have until about the end of 2021 to fix this predicament.

The Worn Out Worker Rule

Can You Work While Applying for Social Security Benefits ...

In addition to the above grid rules, the “work out worker” rule can be used to approve disability benefits for people whose primary work was physical labor and who have only a marginal education. This rule allows for a quick approval of benefits if the following criteria are met:

  • The claimant didn’t go past the 6th grade in school.
  • The claimant has worked at least 35 years doing only “arduous unskilled physical labor” .
  • The claimant can’t do his or her old job because of his or her impairments.

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How To Calculate Social Security Benefits

Lets say your FRA is 66. If you start claiming benefits at age 66 and your full monthly benefit is $2,000, then youll get $2,000 per month. If you start claiming benefits at age 62, which is 48 months early, then your benefit will be reduced to 75% of your full monthly benefitalso called your primary insurance amount. In other words, youll get 25% less per month, and your check will be $1,500.

That reduced benefit wont increase once you reach age 66. Rather, youll continue to receive it for the rest of your life. It may go up over time due to cost-of-living adjustments , but only slightly. You can do the math for your own situation using the Social Security Administration Early or Late Retirement Calculator, one of a number of benefit calculators provided by the SSA that can also help you determine your FRA, the SSAs estimate of your life expectancy for benefit calculations, rough estimates of your retirement benefits, individualized projections of your benefits based on your personal work record, and more.

Although the cost-of-living adjustments announced each year are usually only slight increases, Social Security benefits will increase by 5.9% in 2022, marking the largest increase since 1982.

How Can I Apply For Social Security Disability For My Spouse

You can apply online, by calling Social Security or by visiting a local Social Security office. Social Security disability for a spouse can also be paid if only one spouse is disabled. For example, if you receive SSDI, your spouse can receive up to 50 percent of your benefit amount in addition to what you receive.

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Why Age 60 Is Key For Your Social Security Benefit

Allworth Co-CEO Scott Hanson answers a reader’s question about Social Security.

Ive always believed that the amount of Social Security Ill receive is based upon the age I retire and the amount of money Ive earned. But I just today heard that the level of something called the national average wage index during the year you turn 60 has a major impact on your future Social Security payments.

As Ill be 60 this November, please tell me, this cant possibly be true, can it?

-Ruthie K

Dear Ruthie:

Unfortunately, not only is what youve heard true, but almost no one else realizes it, either.

Thats because, as Ill explain in a moment, what is happening to wages in America right now hasnt happened in 80 years.2 And, most people dont realizebecause its never been an issue in our lifetimesthat your Social Security payments are forever tied to the performance of this wage index during the year you turn 60.

Ruthie, frankly, this is being underreported and its a big deal.

First, as you mentioned above, while there are other factors, most pre-retirees believe that their future Social Security benefit amount is calculated by averaging their 35 highest years of wages, along with the age at which they retire. And, historically, when it comes to those key numbers , thats pretty much the case.

And for the more than four million people born in 1960? Unless something drastic happens, depending on their other sources of income, this could mean trouble.

What Is The Lowest Social Security Payment

When Can My Spouse Collect Social Security Benefits?

Imagine that an individual who attained full retirement age at 67 had enough years of coverage to qualify for the full minimum Social Security benefit of $897. If they filed at 62, there would be a 30% reduction to benefits. This means that for 2020, the minimum Social Security benefit at 62 is $628.

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Does Social Security Last Until You Die

As long as you remain alive, you continue drawing benefits based on your work record and how much youve earned over your lifetime. When you die, the benefits cease there is no accrued balance that is paid out to your estate or to your survivors. Social Security does not pay benefits for the month of your death.

What Is The Future Of Social Security

If you’re skeptical about the future of Social Security or wary of potential changes such as means testingwhich could reduce or eliminate benefits for the wealthy, or an increase in the full retirement ageyou may be tempted to start benefits early, under the assumption that it’s better to have something than nothing. The 2021 annual report from the Social Security Trustees, released in August 2021, projects that the Social Security Trust Fund has enough resources to cover all promised benefits until 2034. Then, absent a change from Congress, the trustees project that benefits would need to be cut for all current and future beneficiaries to about 78% of scheduled benefits. The 2021 report includes the trustee’s best estimates of the impact from the pandemic, which were not reported on last year.

Over the longer term, changes such as later benefit dates or means testing may be considered.

In any situation, if you’re particularly concerned about the future prospects for Social Security, that’s a good reason to save more, and earlier, for your retirement.

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Tips For Getting Retirement Ready

  • Retirement planning with a financial advisor can be extremely helpful. Finding a qualified financial advisor doesnt have to be hard. SmartAssets free tool matches you with up to three financial advisors in your area, and you can interview your advisor matches at no cost to decide which one is right for you. If youre ready to find an advisor who can help you achieve your financial goals, get started now.
  • Figure out how much youll need to save to retire comfortably. An easy way to get ahead on saving for retirement is by taking advantage of employer 401 matching.

How Current Claiming Rules Work

A social security benefits

Current Social Security rules allow workers to claim retirement benefits starting at age 62, or what’s known as the early eligibility age. Those payments are reduced in exchange for claiming early.

Workers get their full benefits if they wait until their full retirement age.

For those who become eligible for retirement benefits in 2021, that age is 66 years and 10 months.

Workers with a full retirement age of 66 get a 32% increase to their monthly benefits if they wait until 70, while those with a full retirement age of 67 stand to get a 24% increase if they hold out that long.

Yet many still claim early, despite the incentive to wait until full retirement age or later.

In 2019, 32.6% of newly retired beneficiaries were 62, the largest group of first-time claimants. That was followed by 25.3% who were 66 and 12.6% who were 65. Just 7.4% were age 70 or older.

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Eligibility Requirements For Divorced Spouses

Before you can receive benefits on your ex-husbands Social Security work record, you must meet all of the following spousal-benefit eligibility requirements: your ex is entitled to Social Security retirement benefits your marriage lasted at least 10 years you are unmarried youre at least 62 years old, and the benefit youre entitled to on your own work record is less than the benefit youd receive on your exs record. If your ex-husband hasnt applied for benefits yet, but qualifies for them and is age 62 or older, you can receive benefits on his record if youve been divorced from him for at least two years and meet all of the requirements listed above.

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