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Youll Get A Bigger Monthly Social Security Check If You Wait Until 70

How long can I get Social Security Disability benefits?

Claiming Social Security before you reach full retirement age will result in a reduction in benefits as much as 25% to 30% less than you would have received if you had waited.; That reduction is permanent.

Instead, if you wait to take your benefits until after your FRA, Social Security will add an 8% delayed retirement credit to your eventual monthly payout each year you hold off, up until age 70.

Thats a guaranteed return of 8% per year of deferral after your FRA, which could be more than you might receive with any other fixed products right now. Its definitely more than the cost of living adjustments that Social Security beneficiaries have been getting for the past decade, which have averaged about 1.5% a year.

Those COLA increases are not always enough to keep up with true inflation. And, when there is a COLA for Social Security, it may be coupled with a Medicare premium increase.

What Is A Social Security Benefit Verification Letter

The Benefit Verification letter, sometimes called a “budget letter,” a “benefits letter,” a “proof of income letter,” or a “proof of award letter,” serves as proof of your retirement, disability, Supplemental Security Income , or Medicare benefits. You may use your letter for loans, housing assistance, mortgage, and for other income verification purposes. You can also use it to prove that you don’t receive benefits, have applied for benefits, or that you have never received Social Security benefits or SSI.

In addition to name, date of birth, and the benefits received, the Benefit Verification letter includes other identifiers to prevent misuse and fraud.

Chapter : What Are Survivor Benefits

While many people associate Social Security benefits with payouts to retired workers, the Social Security Administration in fact distributes several different kinds of beneifts. These include both benefits for the families of a deceased worker, as well as benefits for people who are disabled and so unable to work.

Social Security survivor benefits provide an important source of income for family members whose workers have passed away. As long as the deceased worker would have been eligible to collect Social Security benefits upon their retirement, their family members will be able to collect them in their stead.

Did you Know?

If the deceased worker would have been eligible to collect Social Security benefits upon their retirement, their family may be able to collect them in their stead.

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How Your Ssdi Payments Are Calculated

The severity of your disability will not affect the amount of SSDI benefits you receive. The Social Security Administration will determine your payment based on your lifetime average earnings before you became disabled. Your benefit amount will be calculated using your covered earnings. These are your earnings at jobs where your employer took money out of your wages for Social Security or FICA.

Your SSDI monthly benefit will be based on your average covered earnings over a period of time, which is referred to as your average indexed monthly earnings . The SSA uses these amounts in a formula to determine your primary insurance amount . This is the basic amount used to establish your benefit.

SSDI payments range on average between $800 and $1,800 per month. The maximum benefit you could receive in 2020 is $3,011 per month. The SSA has an online benefits calculator that you can use to obtain an estimate of your monthly benefits.

Newington Human Services Assists With The Application Process For Various Social Security Programs

How Do I Get the Most from My Social Security Benefits ...

To qualify for Social Security disability benefits, you must have worked long enough in jobs covered by Social Security . Then, you must have a medical condition that meets Social Security’s definition of disability.

In general, SSA pays monthly benefits to people who are unable to work for a year or more, or who have a condition expected to end in death. The disability must be so severe the worker cannot work, considering age, education and experience.

If you think you may be eligible to receive disability benefits and would like to apply you can apply online or contact Newington Human Services for assistance. Schedule appointment 860-665-8590.

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You Could Help Keep Your Tax Bill Lower

Many people dont realize that they could end up paying federal income taxes on as much as 85% of their Social Security benefits.

If you file a federal tax return as an individual;and your;provisional income is between $25,000 and $34,000, then up to 50% of your benefits may be federally taxable as earned income. If your provisional income is more than $34,000, you may have to pay federal income taxes on up to 85% of your Social Security benefits.

If you file a joint return and you and your spouse have a provisional income between $32,000 and $44,000, up to 50% of your Social Security benefits could be taxed. If your provisional income with your spouse is more than $44,000, up to 85% of your Social Security benefits may be taxable.

If you dont have much taxable income in retirement, you may not have to pay any federal taxes on your Social Security benefits. But if youre like many Baby Boomers you may have a hefty amount of your retirement savings in tax-deferred IRAs or 401s and the federal income taxes on those savings could be substantial.

To help with that, you may be able to take distributions from your tax-deferred accounts , etc.) now, and perform some Roth conversions, and/or perhaps conversions to other vehicles that can provide you with tax-free income, such as life insurance, so that Social Security benefits later may not be taxed at all by the federal government.

Earn Ssa Work Credits In Some Countries

You may not have enough credits from your work in the United States to qualify for retirement benefits. But, you may be able to count your work credits from another country. The SSA has agreements with 24 countries. If you earned credits in one of those countries, they can help you qualify for U.S. benefits.

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Can A Divorced Woman Who Was Married For More Than 10 Years Claim A Spousal Benefit On Her Ex

Not any longer. The government eliminated a strategy that allowed a spouse or a divorced spouse to use a restricted application to file for a spousal benefit while letting her own retirement benefit grow. Now only people born before 1954 can do this.

Instead, when a spouse or divorced spouse files for benefits, the government will give her all the benefits she is eligible for whether it is her retirement benefit or a spousal benefit, said William Reichenstein, a principal of Social Security Solutions, a company that helps individuals maximize their lifetime income.

A divorced spouse can file for a spousal benefit even if the ex-spouse has not yet claimed a benefit as long as both are at least 62 and are divorced for more than two years. A married spouse must wait until her spouse has filed.

But if the ex-spouse dies, the picture changes. The surviving ex-spouse can claim a survivor benefit as early as 60 and allow her retirement benefit to grow until as late as 70. Or she can claim her reduced retirement benefit early and then switch to a higher survivor benefit at full retirement age.

If you were married for 10 years, keep tabs on the ex, Ms. Floyd said. Once he dies, that survivor benefit could be higher than your own.

Social Security Benefits If Youre Married

Social Security Payments: When do I Get my Disability Money?

Determining Social Security calculations is a bit more complicated if you are married because you have the option to base benefits on your spouses salary history.

If the lesser earning spouses benefits are based on the higher earning spouses, then the limit of those earnings will be 50 percent of the higher earning spouses benefit amount.

To illustrate this, lets talk about A and B, a married couple.

  • A makes significantly more money than B.
  • A makes so much more money that As monthly Social Security benefits are going to be more than twice of Bs, based on Bs salary history.
  • The good news for B is that they can choose to have their Social Security benefits based on As salary history and can receive as much as 50 percent of As monthly benefit. This is the case even if B didnt hold a job outside the home.

On the other hand, if Bs monthly benefit would have been more than half of As, based on Bs salary history, then B can claim that amount.

In short, B can claim the higher of these two possibilities: Bs own Social Security earnings or half of As.

This all assumes that B doesnt begin claiming benefits until B reaches full retirement age. If B begins claiming earlier, then Bs benefits will be less. In addition, if B is claiming benefits based on As earnings, then B does not benefit by waiting later than full retirement age.

B will not be given more monthly benefits if B waits until age 70, for example, based on As earnings.

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How To Apply For A Replacement Social Security Card

If you lose your Social Security card, you may be able to apply for a replacement card online through the Social Security Administration website, if you meet certain requirements. Review them here. Otherwise, youll need to follow an application process that involves providing documentation and completing an application.

Here are 3 simple steps to prepare to apply for a replacement Social Security card:

  • Learn what original documents you need to verify your citizenship, age and identity. Youll find a list at the Social Security Administration website.
  • Fill out and print a Social Security card application.
  • Take or mail the documents and application to the Social Security Administration. Make sure to bring in the original documents. To locate your nearest Social Security Administration office, use the agencys online office locator tool.
  • Brief History Of Social Security

    The Social Security program was created by the Social Security Act that President Franklin D. Roosevelt signed into law in 1935. The first checks went out in 1940. Originally it paid benefits only to workers 65 and older, but in the 1970s the government altered it to allow workers to claim benefits as early as 62. It also instituted annual cost-of-living adjustments to help Social Security keep pace with inflation.

    The program has worked fairly well so far, but many people fear for the future, when there will be fewer workers to support a greater number of Social Security recipients. The latest Social Security Trustees’ Report indicates the program’s trust funds would be depleted by 2035, after which it would be able to pay out only about 76% of benefits to retirees and about 92% to disabled workers.

    The government has proposed several possible solutions for ensuring the long-term sustainability of the program, but at present no plans have been set. There’s no risk of the program disappearing in the next decade or two, but it’s possible future benefits may not go as far as they do today. That’s why today’s workers need to prioritize their personal retirement savings, so they can cover most of their expenses on their own.

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    Earliest Normal Social Security Eligibility Age: 62

    Even though you can begin receiving benefits as early as 62, that doesn’t mean you should start taking them at that age. This is primarily because you will receive reduced benefits. If you want a larger amount of guaranteed income later in retirement, then waiting to begin benefits until you are a few years older will make sense.;Remember, even if you are retired, you can wait until you’re 70 to apply for Social Security so that you get a higher benefit. It is one of the best ways to make sure you have a higher amount of inflation-adjusted income later in life.

    Also, if you take Social Security at this early age and you have earnings above the Social Security earnings limit, your Social Security benefits will be reduced. Once you reach;full retirement age;, there is no reduction in benefits for continuing to work, no matter how much you make.

    You can apply for Social Security retirement benefits any time after you reach 62. Once you reach 62, think of it like open enrollment; you can begin at any time and do not have to wait until another age cut off.

    The Source Ofand Solution Tothe Problem

    What Documents Do I Need to Get a New Social Security Card ...

    When the current Social Security formula was put in place in 1977, no provision was made for the contingency that economic conditions would be so dire that average wages would fall in any given year. This problem first surfaced in 2009 during the Great Recession. The AWI, however, fell by a relatively small amount, and policymakers chose not to do anything about it. As a result of the COVID-19 pandemic, however, the decline in the AWI is likely to be about four times as big now as it was during the Great Recession.

    There is ample precedent for fixing this problem. The first precedent concerns Social Security cost-of-living allowances . As mentioned above, payments in years after beneficiaries first year of retirement are indexed to inflation using a version of the consumer price index . However, under the law, if prices fall in any year, benefits are not adjusted downward; rather, they remain the same. The second precedent concerns the Social Security contribution and benefit base, also known as the taxable maximum. The taxable maximum is the dollar amount of annual earnings above which the Social Security payroll tax does not apply. The taxable maximum is indexed to the AWIbut like COLAs, it is never adjusted downward.

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    What If Social Security Is No Longer Around

    Over the last few years, Americans entering retirement have feared reductions in Social Security benefits and those new to the workforce have feared the dissolution of it altogether. The coronavirus pandemic over the past year and a half has only amplified these fears. The United States has been in jeopardy of depleting the Old-Age and Survivors Insurance Trust Fund for quite a while. Recently, it was anticipated the fund would become insolvent by 2035, however, due to Coronavirus that number has moved closer to 2033. After that point, income and payroll taxes would only cover 75% of the benefits. There are many reasons for the decline, and some have to do with longer life expectancy than previous generations.

    Due to the aging population of the baby boomer generation, the Trust will be distributing more in the form of income than it will be receiving from revenues. Unfortunately, coronavirus has also helped intensify this issue, and some believe the benefits could be depleted by this decade because of the record levels of unemployment. However, Congress would be able to hold off the decline by reducing benefits, means testing, increasing revenues through payroll taxes or even raising beneficiary ages.

    When And How Should I Apply

    According to Social Security Administration, you should apply for benefits four months before you wish to have them begin. You can sit in line at the SS office or call by phone, but like most things today, it can be done much more easily online at;ssa.gov;by following the prompted instructions and providing identifiable information.

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    What About Taxes On Social Security

    Keep in mind that Social Security benefits may be taxable, depending on your combined income. Your combined income is equal to your adjusted gross income , plus non-taxable interest payments , plus half of your Social Security benefit.

    As your combined income increases above a certain threshold , more of your benefit is subject to income tax, up to a maximum of 85%. For help, talk with a CPA or tax professional.

    In any case, if youre still working, you may want to postpone Social Security either until you reach your full retirement age or until your earned income is less than the annual limit. In no situation should you postpone benefits past age 70.

    Will You Max Out Your Social Security Benefits

    How Much Money Will You Get From Social Security?

    The reality is most people aren’t going to have earnings equal to or above the wage base limit over a full 35-year career. That would mean starting out at a high salary and staying there for decades.;

    But the good news is that there are other ways to maximize your personal benefits, even if you can’t earn the largest possible amount. These include raising your income as high as you can, making sure to work at least 35 years, or delaying claiming Social Security as long as possible so you can earn delayed retirement credits that boost the size of your checks.;

    Remember, though, that Social Security is designed to replace only around 40% of income — so even if you max out your benefits, it’s helpful to have other retirement income sources to live a comfortable life in your later years.;

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    Claiming Strategies To Help Retirees Make The Most Of Benefits

    A common filing technique for couples in the past was called the file and suspend method. The file and suspend or claim and suspend technique worked like this:

    A client, Bill, files at his full retirement age of 66, but then suspends taking the benefit. At his full retirement age, his benefit is $2,000 a month but by delaying to age 70, it increases by 8% per year. Since he filed, however, his wife Betty, who is also at her full retirement age of 66, is eligible to claim a spousal benefit of $1,000 per month . She would collect this money for four years until she turned 70, and then take the greater of her spousal benefit or her own benefit.

    This strategy for claiming Social Security came about in 2000 when Congress passed the Senior Citizens Freedom to Work Act. The purpose of this Act was to allow those still working to be able to stop benefits and delay retirement credits. Our example scenario was an unintended loophole, but Section 831 of the Bipartisan Budget Act of 2015 took that away. In the example above, Bill can still defer his social security payments and defer credits, but no payment can be paid out to his spouse or dependents until he takes his benefits unless the client was born before January 2, 1954, he/she has reached full retirement age, and the spouse is already collecting his or her own social security retirement benefit.

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