Can I Get Social Security If I Never Worked
Social Security benefits can have an enormous impact on your retirement. Fortunately, you may be eligible for Social Security even if you havent worked long enough to qualify for your own benefits. By taking advantage of any of these types of benefits, you can boost your retirement income with little to no effort.
Do You Need Life Insurance After You Retire
For most of your adult life, youve probably had life insurance. If it was offered by your employer as part of your benefits package, you may not have given it a second thought. You knew it was there but didnt know much about it. Or you might have taken out a policy as part of good financial planning, especially if you have children.
But now youre about to enter retirementor maybe youre already there. Your employer isnt paying for life insurance anymore, and you have to decide whether to take out a new policy or enter your later years without one. Whats the right choice?
Dont you get tired of hearing that theres no easy answer? Thats because of your bank and investment accountsand your needsare different from your neighbors’ or friends’. Whats appropriate for them may or may not be appropriate for you.
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.
What Is Final Expense Insurance
A final expense policy is a type of life insurance that’s designed to eliminate any financial loose ends when you pass away. These policies feature a guaranteed death benefit that’s payable to your beneficiary.
The proceeds of a final expense policy can be used to cover funeral, cremation or burial costs, as well as outstanding medical bills, credit card debt or any other end-of-life expenses.
Generally, final expense insurance is available to people aged 50 to 85, although some insurance companies may set the cutoff at age 80. Depending on the insurer you purchase the policy from, you may have the choice between term and permanent coverage, with benefit amounts typically ranging from $5,000 to $50,000.
Disability And Ssi Benefits
Lastly, disability is another factor that could affect your SSI benefits. In 2018, 86% of SSI recipients received payments because of disability or blindness.3 Altogether, disabled workers and their dependents account for 14.5% of total benefits paid.3
Any money that you receive from a permanent life insurance policy, whether its from dividends or from a loan that youve taken out against the cash value of your policy, can affect your SSI benefits. Multiple factors that Supplemental Security Income is based on include your currents assets and resources that you possess, as well as your ability to earn money or otherwise collect money for the cost of living for example, through life insurance.
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Reviewing Your Life Insurance Policy
As your life situation changes through the years, so do your insurance needs.
A regular review of your life insurance coverage is important. When reviewing your policy, make sure the benefit covers your current needs. Changes, such as a birth, divorce, remarriage or even a new mortgage or job, are indicators that you might need to increase your benefits or coverage.
You should also review your beneficiaries every few years. If you are the owner of your life insurance policy, in most cases you can change beneficiaries at any time by completing a formal, written notification to your insurance company. During a regular review of your life insurance policy, take into consideration changes in your relationships and family – such as births, adoptions, marriages, remarriages, divorces and deaths – when updating your beneficiaries.
Alternatively, your life changes might allow you to lower your life insurance coverage and premiums. The mortgage might be paid, you might have retired or your children might have completed college. At this stage of life, your life insurance company might be able to offer “conversion privileges” from your current term life insurance policy to a new whole life insurance policy. You might also be able to expend your death benefits so they can be used while you are still living. Ask your insurance agent or company about these options.
To begin your review, read your policy carefully. Look for answers to these questions:
What Is The Lowest Social Security Payment
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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Social Security And Life Insurance
In our last article, we took on the complicated topic of taxation of Social Security benefits. We now examine some the problems associated with SS benefits and how the creative use of life insurance can help fix these issues.
Replacing Lost Benefits at Death
Most families have to rely on their combined SS retirement benefits to maintain their standard of living. Lets look at a typical situation. Your client and his spouse are both age 50 and are beginning to think about retirement.
The foundation of their retirement program will be the benefits provided by SS. Assume they each have a projected retirement benefit of $2,000 per month at their full retirement age age 66. They plan on deferring retirement until age 70, so that theyll earn their 8 percent deferred retirement credits. This will increase each spouse’s retirement benefit to approximately $2,640 per month. In addition, theyve been shown how one spouse can receive a spousal benefit of $1,000 per month ) from age 66 to age 70. Doing this wont reduce their combined benefits beginning at age 70. Check out some of our previous columns to learn how this happens.
Because SS benefits are entitled to COLAs starting at age 62, your client and spouse expect to each have a retirement benefit of at least $3,000 per month beginning at age 70. This will give them a combined total benefit of $72,000 per year.
Using Life insurance to Enhance the Benefit to Children
Life And Accidental Death & Dismemberment Insurance
Eligible employees are provided with basic term life insurance, and may purchase supplemental insurance. Life insurance for a spouse or qualified domestic partner is also available. In addition, the state provides basic coverage for Accidental Death & Dismemberment insurance. Employees may choose to purchase additional AD& D insurance for dependents. For more information visit the Public Employees Benefits Board.
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Fact #: Social Security Provides A Foundation Of Retirement Protection For Nearly Every American And Its Benefits Are Not Means
97% of the elderly either receive Social Security or will receive it.
Almost all workers participate in Social Security by making payroll tax contributions, and almost all elderly Americans receive Social Security benefits. In fact, 97 percent of the elderly either receive Social Security or will receive it, according to Social Security Administration estimates. The near-universality of Social Security brings many important advantages.
Social Security provides a foundation of retirement protection for people at all earnings levels. It encourages private pensions and personal saving because it isnt means-tested in other words, it doesnt reduce or deny benefits to people whose income or assets exceed a certain level. Social Security provides a higher annual payout than private retirement annuities per dollar contributed because its risk pool is not limited to those who expect to live a long time, no funds leak out in lump-sum payments or bequests, and its administrative costs are much lower.
Indeed, universal participation and the absence of means-testing make Social Security very efficient to administer. Administrative costs amount to only 0.6 percent of annual benefits, far below the percentages for private retirement annuities. Means-testing Social Security would impose significant reporting and processing burdens on both recipients and administrators, undercutting many of those advantages while yielding little savings.
Term Life Versus Cash Value
If you decide that you need coverage, you should then determine whether you need Term Life insurance or a Cash Value policy. It is important to know which type of policy you own, and how the benefits are paid if something happens to you or your spouse.
Term life insurance is a policy that is purchased for a period of time . The policy pays money to the named beneficiaries if the insured dies during the term. Term life insurance is intended to provide lower-cost coverage for a specific period and generally have lower premiums in the early years, but do not build up a cash value that you can access. Term life policies may include a provision that allows coverage to continue at the end of the term, even if your health status has changed. However, those premiums may be higher than the original policy. Ask what the premiums will be before you renew. Also, ask if you lose the right to renew at a certain age. If the policy is non-renewable you will need to apply for coverage at the end of the term.
A cash value life insurance policy is different because you can keep it for as long as you need it. These policies also have savings or investment features, which make it possible for policy owners to get money from the policy while theyre still alive. Whole life, universal life, and variable life are types of cash value policies.
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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.
Who Is Eligible For Medicare
Most people enroll in Medicare when they turn 65. You can enroll as early as three months before your 65th birthday or as late as three months after. Youll need to be a United States citizen or have been a permanent legal resident for at least five years. In order to get full coverage, you or your spouse need to meet a work requirement. Meeting the work requirement verifies that youve paid into the system.
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What About Social Security Survivors Benefits
The one-time payment of a funeral grant is not to be confused with ongoing Social Security survivors benefits. Survivors benefits are a continuation of the deceased beneficiarys regular monthly payments to support any dependents who are left without their support. While SSA death benefits are available to surviving spouses and children, survivors benefits are open to:
- A surviving spouse aged 60 and up, or age 50 if theres a qualifying disability
- A surviving spouse of any age who is left in care of a minor child under age 16. Children over 16 may also qualify if they have a disability.
- Unmarried minor children of the beneficiary up to age 18, or up to age 19 if they are full-time students
- Adult children of the beneficiary who are over the age of 18, but who have a permanent disability that began before age 22
- Parents of the beneficiary who were dependent on the beneficiary for at least 50% of their financial support
- Divorced former spouses, though some restrictions apply to their eligibility
Survivor benefits continue to be paid on a monthly basis for as long as the recipient is eligible. These funds may be spent like any income, but they generally dont have to be treated as income for many means tests or tax purposes. Always consult with a financial planner about how to report Social Security benefits as income.
When Should You Start Collecting Social Security Benefits
To determine when you should start taking your benefits, its important to understand how much your check is affected by when you claim your benefit. As mentioned before, you can claim your benefit as early as age 62, but reaching full retirement age can secure your full benefit.
So when exactly is full retirement age? That depends on when you were born.
|Year of birth|
|65 + 2 months for each year past 1937|
|66 + 2 months for each year past 1954|
|1960 and later||67|
While the full retirement age used to be 65, changes to the program have increased that age. For example, those born in 1955 now have to wait an extra two months beyond age 66 to claim their full benefit. Someone born in 1959, for example, would have to wait until age 66 and 10 months to get the full benefit. Anyone born in 1960 or later, receives their full benefit at 67.
But some retirees choose to wait even longer. You may wait until as late as age 70 to claim your benefit, but then you must take it. Youll receive a bigger check for doing so.
So what is the upside to delaying your Social Security benefit after age 62? Your check wont get hit by a serious benefit reduction. Heres how much a $1,000 monthly check will become if you claim your benefit as soon as youre eligible at age 62.
|Year of birth||If you file at 62, benefit reduced by:||A $1,000 check becomes|
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Cobra Notice And Election Forms
You will automatically receive a COBRA Notification with information regarding your eligibility and options to continue health plan coverage within 45 days after your last day of coverage. You will receive the COBRA offer at your home address from a third party administrator, P& A Group. If you do not receive your COBRA information, contact the Human Resources Benefits Unit at . If you have questions after you receive your COBRA offer, please contact P& A Group at or www.padmin.com.
Be sure to keep your payroll clerk informed of any address changes for you and your eligible dependents or update your address on the countys Employee Self Service site.
What Does The Life Insurance Company Do With Your Social Security Number
There are several reasons why life insurance companies need your Social Security number. Heres what they do with that information:
1. Confirmation: Life insurance companies need to make sure youre actually the person applying for coverage. Theyre looking to prevent fraud.
2. Credit Report: Life insurance companies may check your credit report during financial underwriting. Your SSN is used to check if youve had a recent bankruptcy or any other issues to your credit that may be seen as risky.
3. Criminal Records: If youve committed a serious crime in the past, it could affect your chances at life insurance. Companies use your SSN to check on your criminal history and records.
4. Medical Information Bureau: The life insurance company uses the Medical Information Bureau to look at your history of life insurance applications. They use your SSN when referencing the MIB information. So if youve applied for coverage in the past and been denied life insurance, your details will be in your MIB report.
5. Medication History: Theres a prescription drug or medication database thats available to the life insurance companies. They use this database during underwriting to look at your medication history. Its one of the ways they assess your risk class or health class rating before offering you a policy. They need your SSN to access this database.
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Do You Need A Social Security For Life Insurance
Do Life Insurance Beneficiaries Need a Social Security Number? A life insurance beneficiary doesn’t have to have a Social Security number because life insurance companies don’t collect the it with the name of the beneficiary. … If your beneficiary has a Social Security number, it speeds up the identification process.
How To Stop Social Security Check Payments
The SSA can not pay benefits for the month of a recipients death. That means if the person died in July, the check received in August must be returned. Find out how to return a check to the SSA.
If the payment is by direct deposit, notify the financial institution as soon as possible so it can return any payments received after death. For more about the requirement to return benefits for the month of a beneficiarys death, see the top of page 11 of this SSA publication.
Family members may be eligible for Social Security survivors benefits when a person getting benefits dies. Visit the SSA’s Survivors Benefits page to learn more.
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