Thursday, June 16, 2022

Can You Draw Social Security At 62

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You Have A Shorter Life Expectancy

Collecting Social Security at 62 How They Feel About It Now

The government incentivizes waiting to collect your Social Security benefits by giving you a larger monthly amount the longer you delay. For example, if you start collecting benefits at age 62 when your full retirement age is 66, your monthly benefit will be about 75% of your full-age benefit. So if you expected your monthly benefit to be $1,000 per month at 66, you would only receive around $750 at 62.

Although a larger monthly benefit might sound great, keep in mind that youd have to wait four years to get that extra $250 per month. You would receive $36,000 during those four years at the reduced amount of $750 per month.

When you start collecting $1,000 at age 66, that extra $250 per month wont let you break even for 12 years compared to collecting early. If your health is declining and you dont expect to live until youre 78, youll receive more in benefits during your lifetime if you start claiming as soon as possible.

No : Dont Earn Too Much If Youre Working In Retirement

If youre planning to start collecting benefits before your full retirement age and you want to work some then, too, be careful, because your benefits may be reduced. The Social Security Administration explains: If youre younger than full retirement age during all of 2018, we must deduct $1 from your benefits for each $2 you earn above $17,040. The year you reach your full retirement age, the earning limit jumps to $45,360, and the penalty decreases to $1 withheld for every $3 earned above the limit. Any money withheld isnt lost, though. Its factored into the benefit checks you receive later, which end up increased.

When Taking Social Security At 62 Is The Better Deal

    Theres little question that taking Social Security at 62 is not always a good deal. You lock in lower benefits for the rest of your life.

    You can reap a higher benefit at full retirement age from 66-67 depending on when you were born and the highest-possible benefit at age 70. Social Security will pay you more for waiting.

    But what if you cant or dont want to wait? Then early retirement at 62 may be the way to go. Heres how to navigate that question.

    1) Longevity is a factor. If youve been suffering from chronic or traumatic illnesses, then the picture is much different. The average life expectancy for Americans in 2021 is roughly 79 years. Women generally live longer than men. Your overall health is usually the main factor in this decision.

    2) Youre done with work. Lets say youre in an unpleasant, physically demanding or mentally taxing vocation. You dont want to do anything else and you have other savings. Then taking the check at 62 is a good move.

    3) You want to do something completely different. This assumes you want to move on, but youre not through with working altogether. Early retirement benefits can provide a cushion.

    Of course, there are multiple downsides to the early-retirement/Social Security scenario. Your benefits are much lower than full retirement age.

    Also Check: How Much Is Full Social Security

    No More File And Suspend

    Note that the claiming strategy called file and suspend, which allowed married couples who have reached their FRA to receive spousal benefits and delayed retirement credits at the same time, ended as of May 1, 2016. However, spouses born before Jan. 2, 1954, who have attained their FRA may still be able to file a restricted application. It allows them to claim spousal benefits while delaying their own benefits up to age 70.

    Social Security benefits can be taxable if your combined income is high enough.

    Youre Concerned Social Security Will Disappear

    When to Take Social Security Retirement Benefits

    Some people are concerned about potential Social Security changes in the future, such as higher retirement ages, lower benefits or higher taxes on benefits. As a result, they want to take the sure thing as soon as possible. In a 2017 Social Security summary, the government said Social Security trust funds will be depleted in 2034. Even then, however, annual Social Security taxes are projected to keep benefits at almost three-fourths of current levels.

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    You Can Make Your Checks Bigger Or Smaller

    The size of your ultimate Social Security checks is not written in stone. You can make them fatter or slimmer through timing. For every year beyond your full retirement age that you delay starting to collect your benefits , your benefits will increase in value by about 8%. Delay from 67 to 70, for example, and you can make your checks fully 24% bigger. If you would have started collecting about $2,000 per month at 67, you can instead start with around $2,480 per month at age 70.

    That may seem like the obviously smartest thing to do, but it may not be. As the Social Security Administration has explained, If you live to the average life expectancy for someone your age, you will receive about the same amount in lifetime benefits no matter whether you choose to start receiving benefits at age 62, full retirement age, age 70 or any age in between. In other words, for those with average life spans, its a wash. After all, if you delay starting to collect from age 67 to 70, you will miss out on three years worth of payments thats 36 payments.

    Meanwhile, if you start collecting at 62, your benefits may be up to about 30% smaller. Dont let that sway you too much, though. Remember starting to collect at 62 instead of 70 will give you smaller checks, but youll receive eight more years worth of checks 96 more of them.

    Also Check: Social Security Informatio

    How Does Work Affect Your Social Security Payments

      Many people continue to work beyond retirement age, either by choice or out of necessity. But if you are receiving Social Security benefits, you need to be aware of how working can affect your benefit payments. Earning income above Social Security thresholds can cause a reduction in benefits and mean your benefits will be taxed.

      Whether it makes sense to work and collect Social Security at the same time is a complicated assessment that depends on how much you earn and when you begin taking Social Security benefits.

      Local Elder Law Attorneys in Your City

      City, State

      If you work and are full retirement age or older, you can earn as much as you want and your benefits will not be reduced. However, individuals may begin taking Social Security retirement benefits early beginning at age 62. If you are younger than full retirement age, there is a limit to how much you can earn and still receive full benefits. If you earn more than $18,960 , Social Security will deduct $1 from your benefits for each $2 you earn over the threshold. In the year you reach full retirement age, you can earn up to $50,520 without having a reduction in benefits. However, if you exceed $50.520 in earnings, Social Security will deduct $1 from your benefits for each $3 you earn until the month you reach full retirement age. Once you reach full retirement age, your benefits will no longer be reduced.

      For more information on Social Security, .

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      How Returning To Work Can Impact Pensions

      Returning to work after retiring may affect your pension.

      Each pension is different, so its important to look at your plans details.

      Sometimes, you must be rehired as a part-time or contract worker if you want to work for your former employer and still receive pension benefits.

      Other times, returning to work for a former employer will suspend your pension benefits.

      You can usually still collect a pension and work full-time so long as its with a different company.

      Check with your human resources department and your pension plan provider first to understand any potential penalties.

      Social Security Spousal Benefits

      Can You Take Social Security at 62 and Still Work Retirement Question

      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

      Divorced Spouses

      Surviving Spouses

      Applying for Benefits

      So To Speak

      Read Also: How To Figure Out Social Security Retirement Benefits

      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.

      Does Applying Early Impact Benefits

      What age you decide to start drawing on social security benefits largely impacts the amount in your monthly check. Although overall, the amount of money is more or less the same throughout a lifetime regardless of when you decide to take distributions, you can start your retirement benefits as early as age 62 or as late as age 70.

      If you begin taking benefits at 62, your monthly check will be reduced sometimes by as much as 30% than if you had waited to take benefits at age 70. If youre preparing to apply for benefits, knowing when you are eligible to apply and how the system works are the first steps in determining what age is best for you.

      Every persons situation is unique, so setting up a mySocialSecurity account can help you make the most informed decision, says the SSA.

      Find: Alternatives To Social Security That Will Provide Income in Retirement

      Also Check: How Are Your Social Security Benefits Determined

      Taxes On Your Benefits

      Your Social Security benefits may be partially taxable if your combined income exceeds certain thresholds. Regardless of how much you make, the first 15% of your benefits are not taxed.

      The SSA defines combined income using this formula:

      • Your adjusted gross income + nontaxable interest + half of your Social Security benefits = your combined income

      If you file your federal tax return as an individual and your combined income is $25,000 to $34,000, then you may have to pay income tax on up to 50% of your benefits. If your combined income is more than $34,000, you may have to pay tax on up to 85% of your benefits.

      If youre married, filing a joint return, and your combined income is $32,000 to $44,000, then you may have to pay income tax on up to 50% of your benefits. If your combined income is more than $44,000, you may have to pay tax on up to 85% of your benefits.

      Can You Afford To Retire Early

      When Can I Start Taking Social Security Benefits ...

      While it’s great to start collecting benefits early, will they be enough to sustain you? It depends on how much money you’ll need in retirement. Social Security income is critical to most retirees, but it’s not enough for most folks. The average monthly retirement benefit was recently $1,408, which amounts to $16,896 per year. If your earnings have been above average, you’ll collect more than that — up to the maximum monthly Social Security benefit for those retiring at their full retirement age, which was recently $2,788.

      You can use the imperfect but still-helpful 4% rule to help you roughly estimate how much income you might get from your nest egg — the various retirement accounts you have. The rule suggests that you can withdraw 4% of your nest egg in your first year of retirement, adjusting future withdrawals for inflation, in order to make your money last through retirement. The table below will give you a rough idea of how much you might withdraw in your first year of retirement from nest eggs of various sizes:

      Retirement Nest Egg

      $60,000

      Note that you might take out smaller withdrawals to play it safer, and you might have some of your nest egg in solid dividend-paying stocks that pay you a certain percentage without requiring the selling of any shares. If you have, say, $400,000 invested in stocks with an average overall dividend yield of 3%, you’re looking at $12,000 in dividend income for the year — $1,000 per month.

      Growing at 8% for

      Calculations by author.

      Recommended Reading: Social Security Retirement Amounts

      What Are The Maximum Amounts That You Can Get

      The average Social Security retirement benefit in 2021 is $1,565 a month but will be quite a bit higher in 2022 due to the cost-of-living-adjustment 2022 announced on Wednesday. Beneficiaries will see a 5.9 percent increase in the monthly payments kicking the average up to $1,657, or an increase of $92.

      If you turn 62 next year, you can start to claim benefits after you have been 62 for a full month. The maximum you could expect to earn is $2,461 after the increase in 2022. However, starting retirement early may limit the amount that you can get since you will be receiving them for a longer period of time.

      If you wait until you reach full retirement age , the maximum that you could receive is $3,334 after the correction for the COLA 2022. Full retirement age for those born in 1955 is 66 years and 2 months. For those born in each subsequent year you need to add two months per year until those born in 1960 and after reach full retirement age when they turn 70.

      Currently, those who turn 70 in 2022 could see their maximum potential benefit go up to $4,220. You can check your own estimated monthly benefits using the Social Security Administration online calculator tool. You will need to know your annual income for the past 35 years or use an estimate.

      How Much Social Security Will I Get If I Retire At 63

      Monthly Social Security payments are reduced if you sign up at age 63, but by less than if you claim payments at age 62. A worker eligible for $1,000 monthly at age 66 would get $800 per month at age 63, a 20% pay cut. If your full retirement age is 67, you will get 25% less by signing up at age 63.

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      Question: How Much Money Can You Make When You Retire At 62

      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.

      What are the requirements to collect Social Security at 62?

      • What Are The Requirements To Collect Social Security At 62? The requirements are the same as for full retirement. You must be at least 62 years of age and have collected at least 40 work credits. No one is required to collect more than 40 work credits to qualify.

      Can You Work And Collect Social Security Yes With Limits

      Five Reasons to Draw Social Security at Age 62 (Ep. 76)

      As simple words go, retirement carries a lot of weight and a lot of baggage.

      Now that retirement is bouncing around in your mind, and you entertain the thought of giving up your day job, you ask yourself:

      • Is my retirement income and Social Security going to be enough for my preferred lifestyle?

      • What am I going to do with myself every day?

      One answer responds to both questions. You can retire, collect Social Security, still work and be productive. The trick is theres a limit to how much you can make depending on your age.

      If you are at what Social Security deems full retirement age, you can collect and keep your full Social Security benefits and make as much money as you want.

      If you are not yet at full retirement age but are receiving Social Security benefits, you can make up to $18,960 a year without penalty. Thats $1,580 a month, or $364 a week. We get into more details later in this post of what happens when you go over that amount.

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