B You Can Stop Working And Start Receiving Your Retirement Benefits
If you make the decision to stop working and start receiving retirement benefits before your full retirement age, your benefits are reduced a fraction of a percent for each month before your full retirement age. Also, your benefits will not increase because of additional earnings.
We calculate your benefits based on your highest 35 years of earnings, and if you stop working before you have attained 35 years of earnings or you have years with low earnings, this will affect your benefit calculation.
If you delay your benefits until after full retirement age, you will be eligible for delayed retirement credits that would increase your benefit.
If you stop working and start receiving retirement benefits before age 65, you are automatically enrolled in Original Medicare when you turn 65. If you are not receiving your Social Security benefits when you turn 65, you will need to apply for Medicare benefits three months before you turn 65. If you dont sign up for Medicare Part B when youre first eligible, you may have to pay a late enrollment penalty for as long as you have Medicare coverage.
When To Apply For Benefits
At full retirement age, the spousal benefit youre entitled to is 50% of the benefit of the highest-earning spouse. If the Social Security you earned is $900 and your spouse receives $2,000, you will receive an extra $100 per month in spousal benefit to bring your payment to $1,000 or 50% that of your spouse. If your own Social Security earnings exceed the 50% amount, you wont receive a spousal benefit.
The amount of the spousal benefit you receive, however, depends on the age at which you file for Social Security, and there are two benchmarks: age 62 and 67, which is the full retirement age for workers born after 1954.
If you file at age 67, you will get the full 50% of your spouses Social Security payment. If you file at age 62, you will receive 32.5% of the spousal benefit. The amount increases on a sliding scale until you reach the 50% amount at age 67. The Social Security Administration has a calculator to provide the percentage youll receive by entering your date of birth and the month and year you want to receive benefits.
Its easy to take the money and run as soon as youre eligible, usually when youre 62, said Lyle Solomon, a financial expert and consumer bankruptcy attorney in California. After all, youve most certainly paid into the system for your whole working life and are now ready to collect your benefits. Its also wonderful to have a monthly income guarantee.
But should you apply for benefits?
Early Social Security Office 300 Early Blvd Tx 76802
This page covers all relevant information about the Early Social Security Office at 300 Early Blvd, Early, TX, 76802. In addition to the office phone number, we also provide driving directions, hours of operation, and answers to frequently asked questions.
For specific information about your Social Security benefits or to schedule an appointment, call the Early Social Security Office using the phone number listed below. The SSA representatives at the Early office location should be able to help with any important questions related to Social Security retirement benefits, disability benefits, SSI, or Medicare.
Many Social Security services can now be done online. Not only can utilizing online services save you a trip to the Early office location, it will also usually result in faster processing times. Below you can find a list of some common Social Security services that are now offered online.
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Retiring Early Will Reduce Your Benefit
You can begin receiving Social Security benefits before your full retirement age, as early as age 62. However, if you retire early, your Social Security benefit will be less than if you wait until your full retirement age to begin receiving benefits. Your retirement benefit will be reduced by 5/9ths of 1 percent for every month between your retirement date and your full retirement age, up to 36 months, then by 5/12ths of 1 percent thereafter. For example, if your full retirement age is 67, you’ll receive about 30 percent less if you retire at age 62 than if you wait until age 67 to retire. This reduction is permanent–you won’t be eligible for a benefit increase once you reach full retirement age.
However, even though your monthly benefit will be less, you might receive the same or more total lifetime benefits as you would have had you waited until full retirement age to start collecting benefits. That’s because even though you’ll receive less per month, you might receive benefits over a longer period of time.
How Can I Apply For Social Security At Age 62
Your Social Security eligibility begins during the first full month in which you are age 62, which is the month after your birthday in most cases. You can apply for Social Security four months before that date. For instance, if you turn 62 in May, you can apply in February to begin receiving benefits from Social Security in June.
There is an important exception to this guideline. People with birthdays that fall on the first or second day of the month can begin receiving benefits during the month in which their birthday falls. For these individuals, an example would look like this:
You can apply for Social Security online or visit your local Social Security Administration office to apply for benefits.
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In Most Cases It Doesn’t Make Sense But There Are Exceptions
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Lets be clear in most cases, filing for Social Security at age 62 is a bad idea, but lets stay on the positive side of things. There are some reasons you might want to apply early.
How Do You Apply For Social Security Benefits
If you are eligible for Social Security benefits, you can apply online, by phone or by appointment at a local Social Security office.
How to Apply for Social Security Benefits
- Applying online is the easiest way to apply for Social Security benefits. The Social Security website allows you to apply for retirement, spouses, Medicare and disability benefits at the same site. You can also apply for Supplemental Security Income benefits.
- If you dont have Internet access, you can sign up by phone. You can call the Social Security Administration at 1-800-772-1213 .
- The Social Security Administration has restrictions on office visits during the COVID-19 pandemic. It does allow in-person visits for certain services. You should check with the SSAs Coronavirus page to see if you can make an in-person appointment at your local office.
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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 you’re 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.
What Happens If You Claim After Your Fra
If you wait until your age 70 to start claiming benefits, then youll get an extra 8% per yearor, in total, 132% of your primary insurance amount for the rest of your life. Claiming after you turn 70 doesnt increase your benefits further, so theres no reason to wait longer than that.
The longer you can afford to wait after age 62 , the larger your monthly benefit will be. Nevertheless, delaying benefits doesnt necessarily mean that youll come out ahead overall. Other factors should be considered, including your expected longevity and whether you plan to file for spousal benefits. You should also consider the tax, investment opportunity, and health coverage implications.
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Early Retirement And Social Security
The estimates you see on your Social Security statement are based on working until that stated age. For example, if your Social Security statement says you will get $1,100 a month at age 62, that estimate assumes you’ll work until you turn 62.
The amount of benefits your statement says you will get at age 66 or 67 assumes you work until your 66th or 67th birthday. This means that if you take early retirement, your benefits are likely to be less than what you see on your statement.
Social Security benefits are calculated based on your highest 35 years of work history, with the highest 35 determined after each year of work has been indexed for inflation. If you take early retirement, and you do not have a full 35 years of work history, your Social Security benefits may be lower than if you were to continue to work for a longer time period.
If you didn’t work 35 years, Social Security will add zeros for each year you didn’t work. All of those zeros will bring down your average and reduce the size of your check.
Even if you retire early, be careful about taking your Social Security benefits at age 62 without doing an analysis first. In many cases, it is better to find other sources of funds to finance your early retirement so you can delay the start of your Social Security benefits. That can help protect you from running out of money later in life.
Youre Planning Your End
Your Social Security benefits stop paying at your death, so if you die prior to collecting benefits, youll have missed out on benefits entirely. You need to figure out how to maximize your Social Security income, instead. For example, say youre planning to wait until age 70 so you can claim the larger monthly benefit. If you die right before your 70th birthday, you wont receive any benefits. Its very difficult to predict how long youll live, especially if youre in good health now. However, if you are suffering from a terminal or serious illness, the increased monthly benefit for delaying Social Security might not be worth it.
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When Should You Apply For Retirement Benefits
Many people who quit work at age 62 apply for disability at the same time they elect for early retirement benefits. This allows the early retirement payments to fill the income gap until your claim for disability is approved. It also provides you with retroactive relief from the difference in amounts.
However, there is no guarantee that your disability benefits claim will ultimately be approved, in which case you will be resigned to collecting the lower early retirement payments for the rest of your life.
If you are severely impaired, however, this might be a good option to consider. Being approved for disability benefits is easier for those age 60 or older, and special consideration is given to those over age 65.
What Does It Take To Qualify For Social Security Spousal Benefits
Unlike most rules related to Social Security, the rules for the spousal benefit entitlement are pretty straightforward and easy to understand.
If youve been married to your current spouse for at least one year, youre eligible for a spousal benefit under their work record.
Pretty simple, right?
You may also qualify for the spousal benefit If youre divorced but the marriage lasted for at least 10 years and youre not currently married.
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When Should You Apply
If you decide to take benefits early at age 62, the soonest you can apply is up to four months before you want your retirement benefits to start. You must be at least age 62 for the entire month to be eligible to receive benefits.
The Social Security Administration states that if you were born on the first or second day of the month, you meet this requirement in the month of your 62nd birthday. If you were born on any other day of the month, you do not meet this requirement until the following month.
For example, the SSA states that if you turn 62 on Dec. 2, you can start your benefits as early as December. If you want your benefits to start in December, you would need to apply in August. If you turn 62 any day after December 2, you are age 62 for the entire month of December, meaning you can start your benefits as early as January when you are 62 for the entire month. This means you would have to apply in September.
Costs Of The Solution
Two issues that are likely to arise in any discussion of fixing this problem are its cost to the Social Security trust fund and its cost to the federal budget. With regard to the cost to the Social Security trust fund, there are three ways to look at the issue.
One way is to view the cost relative to costs in a world in which no pandemic had occurred. For example, the cost could be measured using the economic assumptions in the most recent Social Security trustees report , which were formulated before the pandemic began. From this perspective, the cost would be zero because the legislative change would restore the world of Social Security benefits to what it would have looked like had there been no pandemic.
A second way of looking at the issue is to view the cost of the change relative to costs in a world that reflected economic assumptions indicative of the economic recession caused by the pandemic. From this viewpoint, there would be a cost associated with fixing the problem. For example, the chief actuary of the SSA estimates that if the AWI in 2020 were to fall 5.9 percent below its 2019 level, the AWI adjustments proposed by Chairman Larson would cost $90 billion in present-value dollars for the 75-year period from 2020 through 2094about 0.02 percent of taxable payroll over that period. . The cost over the 10-year period from 2020 to 2029 would be about $21 billion in nominal dollars.
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How Should I Decide When To Take Benefits
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
How Old Must You Be To Apply For Benefits
When you can apply for benefits will largely depend on your unique situation. The official retirement age is determined by the year in which a person was born.
For example, those born after 1960 have an official retirement age of 67. That being said, a person can begin receiving benefits when they are 62 years of age or at age 60 if they are a widow or widower who has not remarried.
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Pension Benefits Can Lower Earnings
Some pension plans offer a larger initial monthly benefit when you take early retirement the pension benefit then automatically goes down when you become eligible to draw on Social Security. If you are not aware of this, you may think you will get your full pension benefit plus Social Security.
Not all pensions work this way, so attend all classes or seminars offered by your employer to make sure you fully understand your pension and health benefits prior to taking early retirement. Ask plenty of questions, and set up a one-on-one appointment with a benefits advisor or HR person if you can.
In addition, if you worked in education or for the state or a government entity, be aware when you do begin your Social Security benefits that they may be less than what your statement shows due to something called the Windfall Elimination Provision and/or the Government Pension Offset.
For example, suppose your neighbor Lois worked as a teacher for 43 years, and in retirement she expects to get her pension plus $1,300 a month in Social Security. She will be shocked when she learns her Social Security will be less than $300 a month due to the government pension offset that applies if you get a pension for years of work where you were not covered under the Social Security system.