The Government Pension Offset
The GPO affects SERS retirees or disability benefit recipients who are, or will be, receiving a Social Security benefit based on their spouses Social Security account. This includes surviving spouses qualifying on an ex-spouses account. The GPO does not apply to the spouses own Social Security benefit. It does not affect Medicare coverage.
The GPO applies to a SERS retiree or disability benefit recipient who was first eligible to retire from SERS after July 1, 1983, and who receives Social Security benefits.
How the GPO Works
The amount of your Social Security spousal benefit is reduced by two-thirds of the amount of your SERS pension.
For example: Your SERS monthly pension is $1,200, and you also are entitled to a $1,000 Social Security spousal benefit. Two-thirds of your SERS benefit is $800, and when deducted from your Social Security benefit, leaves you with $200 in a Social Security benefit and your full $1,200 SERS pension.
Depending on your gross SERS pension amount, the GPO could eliminate your Social Security spousal benefit entirely.
To find out how the GPO might affect you, go to the SSA website or contact SSA.
Fact #: Social Security Benefits Are Modest
Social Security benefits are much more modest than many people realize the average Social Security retirement benefit in June 2020 was about $1,514 a month, or about $18,170 a year. For someone who worked all of their adult life at average earnings and retires at age 65 in 2020, Social Security benefits replace about 40 percent of past earnings. This replacement rate will slip to about 35 percent for a medium earner retiring at 65 in the future, chiefly because the full retirement age, which has already risen to 66, and is gradually climbing to 67 over the 2017-2022 period.
The average Social Security retirement benefit in June 2020 was $1,514 a month, or about $18,170 a year.
Moreover, most retirees enroll in Medicares Supplementary Medical Insurance and have Part B premiums deducted from their Social Security checks. As health care costs continue to outpace general inflation, those premiums will take a bigger bite out of their checks.
Social Security benefits are modest by international standards, too. The United States ranks just outside the bottom third of developed countries in the percentage of an average workers earnings replaced by the public pension system.
Social Security lifted 1.5 million children out of poverty in 2018, as the chart shows.
What Is Average Compensation
The average of a member’s 36 highest consecutive months of compensation as certified by the public employer.
For members newly enrolled in PERS on or after January 1, 2010, the average compensation shall be based on the average of the 36 highest consecutive months of compensation subject to a 10% salary cap.
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Get Payments For An Ex
If you aren’t married, but you were in the past for at least 10 years, you may still be able to file for spousal or survivor benefits. They would be based on your ex-spouse’s earnings. Too many divorced people are not aware of their payment options based on an ex-spouse’s earnings record. Look at all of your options so that you can claim in a way that makes the most of your income when you retire.
Do You Get More Social Security At 63 Than 62
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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Wait To Claim Benefits For As Long As Economically Feasible
Arguably the most important consideration is the age that you claim Social Security benefits. Qualifying seniors are allowed to begin taking benefits at age 62, or any age thereafter. However, the SSA dangles a pretty tasty carrot if you hold off on enrolling for benefits. For each year you wait, your monthly benefit grows by approximately 8%, up until age 70. This means an individual claiming at age 70 can earn up to 76% more than an individual claiming at age 62 with an identical work history and earnings history.
Also critical to know is your full retirement age , or the age at which the SSA deems you eligible to receive 100% of your monthly benefit. It’s determined by your birth year, with the newest retirees who were born in 1956 having an FRA of 66 years and four months. If you claim before this age, your benefit will be permanently reduced for life. If you wait until after this age, you can net an even larger monthly check.
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Fact #: Social Security Lifts Millions Of Elderly Americans Out Of Poverty
Without Social Security benefits, about 4 in 10 Americans aged 65 and older would have incomes below the poverty line, all else being equal, according to official estimates based on the 2019 Current Population Survey. Social Security benefits lift more than 15 million elderly Americans out of poverty, these estimates show.
An important study that matches Census estimates to administrative data suggests that the official estimates overstate elderly reliance on Social Security. That study finds that in 2012, 3 in 10 elderly Americans would be poor without Social Security, and that the program lifted more than 10 million elderly Americans out of poverty.
No matter how it is measured, however, its clear that Social Security brings millions of elderly Americans out of poverty and dramatically reduces the elderly poverty rate.
Max Out Earnings Through Full Retirement Age
The SSA calculates your benefit amount based on your earnings, so the more you earn, the higher your benefit amount will be. Some pre-retirees look for ways to increase their income, such as taking on part-time work or generating business income. Others, however, unaware of the impact on benefits, may scale back on their work or semi-retire, which can lower their Social Security income.
“Money earned after age 60 isn’t indexed, which means that income-earning in your 60s can replace a year in which there was a zero or a year in which you had lower earnings,” says Marguerita Cheng, CFP®, CRPC®, RICP, CDFA, CEO of Blue Ocean Global Wealth, Gaithersburg, MD.
Earnings above the annual cap$142,800 in 2021 and indexed to inflation each yearare left out of the calculation. Your goal should be to maximize your peak earning years, striving to earn at or above the cap.
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No : Delay Starting To Collect Your Benefits
Another way to increase your Social Security benefits is to delay starting to collect them. You can start as early as age 62 and delay up to age 70. Each of us has a “full” retirement age , and for every year beyond that that you delay, your benefits will grow by about 8%. Delay from age 67 to 70 and you’ll get benefits 24% bigger. The table below shows the effect of starting to collect early or late. For example, if your full retirement age is 67 and you start collecting benefits at 64, your checks will be 80% of what they would have been had you started collecting at 67.
Social Security benefits table
How Do I Increase My Social Security Benefits After Retirement
To increase your monthly benefit, don’t start taking Social Security payments right when you reach full retirement age. The longer you wait, the more you’ll get each month. If you want to get the highest possible amount of Social Security benefits each month, you need to wait until age 70 to retire.
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How Your Social Security Benefits Are Calculated
Your Social Security benefits are based on the 35 calendar years in which your income was the highest. If you have fewer than 35 years of earnings, each year with no earnings will be entered as zero. You can increase your Social Security benefit at any time by replacing a zero or low-income year with a higher-income year.
There is a maximum Social Security benefit amount you can receive, though it depends on the age you retire. For someone at full retirement age in 2021, the maximum monthly benefit is $3,113. For someone filing at age 70, the maximum monthly amount is $3,895.
Will Social Security Get A $200 Raise In 2021
In order for a 5.9% increase to result in an extra $200 per month in benefits, you would have needed to have received at least $3,389 per month in 2021. … This figure changes from year to year to adjust for inflation and is the the amount on which the SSA calculates the maximum Social Security benefit.
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How Benefits Are Calculated
Social Security benefits are calculated based on your 35 highest-earning working years. Therefore, if you keep working and earn a higher salary in your 60s than you did earlier in your career, you could boost your Social Security payments even more.
If you don’t need the money as soon as you reach full retirement age and are in good health, it’s probably wise to wait until you turn 70 to apply. “When you think of Social Security the right way, as insurance against outliving your money, then it makes sense to wait until age 70 for the highest payout available,” says Robert R. Schulz, CFP®, president of Schulz Wealth in Mansfield, TX.
Are You Eligible For Social Security
To be eligible for Social Security benefits, you must earn at least 40 credits over your working career. How those credits are calculated is complex, but you will likely qualify if you have worked for at least 10 years.
You may be entitled to a spousal benefit because of your partner’s work history. If your spouse, ex-spouse, or deceased spouse has earned 40 credits, you may qualify. The Social Security Administration provides more info about this option.
But your work history is not only used as part of the qualification criteria it is also used to figure out the amount of your payment. In calculating your monthly retirement benefit, the SSA considers your highest-earning 35 years of work history. If you worked for less than 35 years, the SSA will use zero for some years.
The higher your earnings over those 35 years, the greater your contribution to the program through FICA taxes, and the higher your benefit will be.
The same threshold applies to both your earnings and your benefits. This amount is $142,800 in 2021, and it will raise to $147,000 for the 2022 tax year.
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Your May Have To Pay Taxes On Social Security Benefits
Most people know that you pay tax into the Social Security Trust Fund throughout your career, but some retirees don’t realize that you also have to pay tax on your Social Security benefits once you start taking them. Benefits lost their tax-free status in 1984, and the income thresholds for triggering tax on benefits haven’t been increased since then.
It doesn’t take a lot of income for your Social Security benefits to be taxed. For example, a married couple with a combined income of more than $32,000 may have to pay income tax on up to 50% of their Social Security benefits. Higher earners may have to pay income tax on up to 85% of their benefits.
You may also have to pay state income taxes on your Social Security benefits. See our list of the 12 States That Tax Social Security Benefits.
How Do Social Security Benefits Increase After Age 66
If you start receiving benefits at age 66 you get 100 percent of your monthly benefit. If you delay receiving retirement benefits until after your full retirement age, your monthly benefit continues to increase. … 67, you’ll get 108 percent of the monthly benefit because you delayed getting benefits for 12 months.
Social Security: 10 Smart Ways To Get More Benefits
Without Social Security benefits, 22 million Americans would be poor â per a report from the Center on Budget and Policy Priorities. About 21% of married elderly beneficiaries and 44% of unmarried ones get fully 90% or more of their income from Social Security, while about 48% of married elderly beneficiaries and 69% of unmarried ones get 50% or more of their income from it, according to the Social Security Administration.
How much money are we talking about? Well, the average Social Security retirement check was recently $1,417, or about $17,000 annually. If that doesn’t seem like much, know that there are ways to increase your benefits. Here are 10 strategies to consider:
Let’s examine each in more detail.
How Long Will You Live In Retirement
Based on current estimates, a 65 year old man can expect to live approximately 18 years in retirement, and a 65 year old woman can expect to live about 20 years, but many people live longer. Planning to live well into your 90s can help you avoid outliving your income.
The worksheet takes into account some factors that impact your retirement savings. First, investing – because it involves risk. Second, inflation – because todays dollars will usually buy less each year as the cost of living rises. Your target savings rate includes any contributions your employer makes to a retirement savings plan for you, such as an employer matching contribution. If, for example, you are in a 401 plan in which you contribute 4 percent of your salary and your employer also contributes 4 percent, your saving rate would be 8 percent of your salary.
If you are not currently saving this amount, dont be discouraged. The important thing is to start saving even a small amount and increase that amount when you can. Come back and update this worksheet from time to time to reflect changes and track your progress.
Here are a few tips on how to save smart for retirement:
To track other resources you may have in retirement, start by getting your Social Security statement and an estimate of your retirement benefits on the Social Security Administrations website, www.socialsecurity.gov/mystatement.
Get started today for a secure financial future!
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How To Calculate The Marginal Social Security Benefit Increase For Additional Years Of Income
Of course, the caveat is that determining whether an upcoming years worth of earnings may be higher than historical inflation-adjusted earnings requires first determining what those historical earnings were on an inflation-adjusted basis. This can be estimated by first obtaining the individuals Social Security work history, which can be found by logging into the individuals My Social Security online account, or drawn directly from his/her Social Security statement. Once those historical earnings are found, they can be adjusted using the National Wage Index adjustment factors , to determine what the inflation-adjusted historical earnings amounts really were.
Obtaining the list of year-by-year historical earnings from the Social Security work history record is ultimately necessary for two reasons. First, its necessary to determine which of the three bend points the Social Security income replacement rates will apply, as theres a big difference in benefit between the 90%, 32%, and 15% levels! Second, having historical inflation-adjusted earnings makes it possible to compare the upcoming years earnings to the lowest historical inflation-adjusted year, to determine the income difference and prospective increase in AIME.
Change In How You Report Earnings
The Social Security Administration bases its benefit calculations on earnings reported on W-2 forms and on self-employment tax payments. Most individuals are not required to send in an estimate of earnings.
However, the Social Security Administration does request earnings estimates from some recipients: those with substantial self-employment income or those whose reported earnings have varied widely from month to month, including people who work on commission. Toward the end of each year, Social Security sends those people a form asking for an earnings estimate for the following year. The agency uses the information to calculate benefits for the first months of the following year. It will then adjust the amounts, if necessary, after it receives actual W-2 or self-employment tax information in the current year.
Once a beneficiary reaches full retirement age, his or her income will no longer be checked. Because there is no Social Security limit on how much a person can earn after reaching full retirement age, there is nothing to report.
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