How Can A Social Security Agreement Help Me Qualify For Benefits
A social security agreement can help you qualify for benefits by allowing you to combine your periods of contribution or periods of residency in Canada with your periods of contribution or periods of residency in the other country to meet the minimum eligibility criteria. It can also reduce or eliminate restrictions based on citizenship or on payment of pensions abroad.
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.
Theres An Annual Social Security Cost
One of the best features of Social Security benefits is that the government adjusts the benefits each year based on inflation. This is called a cost-of-living adjustment, or COLA, and helps your payments keep up with increasing living expenses. The Social Security COLA is quite valuable its the equivalent of buying inflation protection on a private annuity, which can get expensive.
Because the COLA is calculated based on changes in a federal consumer price index, the size of the COLA depends largely on broad inflation levels determined by the government. In 2021, Social Security beneficiaries saw a 1.3% COLA in their monthly Social Security benefits.
The Kiplinger Letter predicted in September that the COLA for 2022 could be 6%, which would be the largest adjustment since 1982. The final COLA for 2022 will be announced on Oct. 13.
Heres what COLAs have been in other recent years:
- 2009: 5.8%
- 2021: 1.3%
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Do Social Security Benefits Start The Month Of Your Birthday
When To Enroll in Retirement BenefitsThe choice to begin accepting benefits as early as allowed versus delaying until full retirement age or later is a personal one. Regardless of the age you choose to collect, the payment schedule hinges on the month of your birthday. In the case of family survivors, the point of reference is the birthday of the deceased who earned enough credits for the family to be eligible for survivor benefits.
Schedule of SS paymentsSocial Security benefits are not prorated. They start the month following the birthday. The schedule, according to AARP, follows this rule: When the birth date falls between the 1st and 10th of the month, the payment is issued on the second Wednesday of the month following the birthday month. For birth dates between the 11th and 20th of the month, expect to be paid on the third Wednesday after the birthday month. For birth dates from the 21st through the last date of the month, recipients will have to wait until the fourth Wednesday of the month that follows the birthday.
Consequences of Early RetirementThe reason people struggle with the decision of whether to collect at age 62, full retirement or 70 is the exponential difference in benefits. Contrary to what some believe, 66 is not always the full retirement age as defined by the SSA. Retirement age varies with the beneficiarys year of birth, ranging anywhere from age 65, for retirees born in 1937 or earlier, to age 67 for those born in 1960 or later.
You Start Benefits While You Work And Earn Too Much
Suppose you started collecting Social Security before your FRA and later decide to head back to work. You may want to stop benefits if your earnings exceed the earnings limit, which would result in a lower payment.
For instance, if you’re under your FRA throughout 2021, the SSA will deduct $1 from your benefits for every $2 you earn over $18,960. If you reach your FRA at any point during 2021, the SSA will take out $1 for every $3 you make above $50,520 until the month before you reach your FRA.
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What If I Change My Mind
If you receive Social Security benefits at a reduced rate, but then change your mind, you have the option of withdrawing your application and paying back to the government what you’ve already received . Then, you could restart benefits at a later date to take advantage of a higher payout. But you are limited to one withdrawal per lifetime.
For example, let’s say you elected to receive early benefits at age 62, but then decided to go back to work at age 63. You could withdraw your Social Security application within the first 12 months of receiving benefits, pay back the years’ worth of benefits you received, go back to work, and then wait until a later age to restart your benefit checks at a higher level.
For important details about repaying benefits please read the SSA publication If You Change Your Mind.
C You Can Continue Working And Not Receive Your Retirement Benefits
If you decide to continue working and not start your benefits until after full retirement age, your benefits will increase for each month you do not receive them until you reach age 70. There is no incentive to delay filing for your benefits after age 70. Continuing to work may also increase your benefits, because your current earnings could replace an earlier year of lower or no earnings, which can result in a higher benefit amount.
If you are not receiving your Social Security benefits when you turn 65, you will need to apply for Original Medicare three months before you turn 65. If you dont sign up for Medicare Part B when youre first eligible at age 65, you may have to pay a late enrollment penalty for as long as you have Medicare coverage.
However, if you or your spouse are still working and covered under an employer-provided group health plan, talk to your personnel office before signing up for Medicare Part B. Once the covered employment ends, you may be eligible for a Special Enrollment Period to sign up for Part B. If so, you wont have to pay a late enrollment penalty.
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Theres A Social Security Spousal Benefit
Marriage brings couples an advantage when it comes to Social Security. One spouse can take what’s called a spousal benefit, worth up to 50% of the other spouse’s Social Security benefit. For example, if your monthly Social Security benefit is worth $2,000 but your spouse’s own benefit is only worth $500, your spouse can collect a spousal benefit worth $1,000 — bringing in $500 more in income per month.
Just as the benefit based on your own work history is reduced if you claim it early, the same is true for a spousal benefit. That 50% figure is the maximum amount that only a spouse who is at least full retirement age is eligible for. Taking the spousal benefit early at, say, age 62, reduces the amount to as little as 32.5% of the higher earners benefit. If you take your own benefit early and then later switch to a spousal benefit, your spousal benefit will still be reduced.
Can You Still Work While Receiving Social Security
You can continue to work while you receive Social Security benefits. But there is a limit to how much you can earn and still receive full benefits. The earning limit may be adjusted each year.
If you earn above the limit, Social Security will deduct a certain amount of your benefits each year.
Social Security Benefits, Earning Limits and Penalties
|SSA deducts $1 from your benefits for every $3 you earn above the limit|
Your Options: Working Applying For Retirement Benefits Or Both
Choosing when to start receiving your Social Security retirement benefits is an important decision. Theres no one choice that works for everyone because your lifestyle, finances, and goals are not the same as others.
Do you want to retire early, stay on the job, or work beyond retirement age?
Should you start receiving retirement benefits now, or wait until you can receive a higher benefit amount?
These are important questions youll need to answer as you plan for your retirement. Consider the four options below to help you make the best decision.
How Much Can I Earn And Still Get Benefits
When you begin receiving Social Security retirement benefits, you are considered retired for our purposes. You can get Social Security retirement or survivors benefits and work at the same time. However, there is a limit to how much you can earn and still receive full benefits.
If you are younger than full retirement age and earn more than the yearly earnings limit, we may reduce your benefit amount.
If you are under full retirement age for the entire year, we deduct $1 from your benefit payments for every $2 you earn above the annual limit. For 2021, that limit is $18,960.
In the year you reach full retirement age, we deduct $1 in benefits for every $3 you earn above a different limit. In 2021, this limit on your earnings is $50,520. We only count your earnings up to the month before you reach your full retirement age, not your earnings for the entire year.
If your earnings will be over the limit for the year and you will receive retirement benefits for part of the year, we have a special rule that applies to earnings for one year. The special rule lets us pay a full Social Security check for any whole month we consider you retired, regardless of your yearly earnings.
Read our publication, How Work Affects Your Benefits, for more information.
When you reach full retirement age:
Also Check: Claiming Social Security Early
When A Spouse Dies
When one spouse dies, the surviving spouse is entitled to receive the higher of their own benefit or their deceased spouses benefit. Thats why financial planners often advise the higher-earning spouse to delay claiming. If the higher-earning spouse dies first, then the surviving, lower-earning spouse will receive a larger Social Security check for life.
When the surviving spouse hasnt reached their FRA, they will be entitled to prorated amounts starting at age 60. Once at their FRA, the surviving spouse is entitled to 100% of the deceased spouses benefit or their own benefit, whichever is higher.
Get Personalized Retirement Benefit Estimates
Choosing when to retire is an important and personal decision. The best way to start planning for your future is by creating a mySocial Security account. With your personal mySocial Security account, you can verify your earnings, and use our Retirement Calculator to get an estimate of your retirement benefits.
What Else Affects Your Retirement Benefits
Everyones retirement is unique. Beyond deciding when to begin receiving retirement benefits, other factors that can affect your benefits include whether you continue to work, what type of job you had, and if you have a pension from certain jobs.
Continuing To Work
You can choose to keep working beyond your full retirement age. If you do, you can increase your future Social Security benefits. Each extra year you work adds another year of earnings to your Social Security record. Higher lifetime earnings can mean higher benefits when you choose to receive benefits.
Specific Types Of Earnings
While Social Security earnings are calculated the same way for most American workers, there are some types of earnings that have additional rules.
Earning types with special rules include:
Pensions And Other Factors
Pensions and taxes have the potential to impact your retirement benefit. Review the resources below on pensions and other factors you should consider:
- Windfall Elimination Provision : If you have a pension from a job for which you didnt pay Social Security taxes, this policy may lower your retirement benefits.
- Government Pension Offset : This policy affects benefits as a spouse, widow, or widower if you have a pension from a government job for which you didnt pay Social Security taxes.
- Income Taxes And Your Social Security Benefits: You might have to pay federal income taxes on your Social Security benefits in certain situations.
What Other Factors Should You Consider When Deciding To Collect Social Security
Before you decide to collect Social Security based on your break even point, you should also consider how collecting early or delaying could impact the benefit your spouse receives.
Since the Social Security formula benefit is based on an individual’s 35 highest earning years, women often collect less in benefits than men because of career breaks during motherhood and overall lower lifetime earnings. However, the Social Security spousal benefit erases some of the disparity in Social Security earnings between men and women.
The spousal benefit is available to all spouses, regardless of whether the spouse has a work history or not . The spousal benefit is 50% of the higher earner’s benefit and in order for a spouse to receive the benefit, the higher-earner must be collecting their own benefit.
The Social Security administration automatically determines whether an individual would earn more in Social Security benefits if they collected on their own work record versus their partner’s work record.
For example, if the higher earner receives a $2,000 monthly benefit, the spouse is eligible to receive up to $1,000, depending on whether they choose to wait until full retirement age, says Kiner. For example, if someone collects the spousal benefit four years before full retirement age, their benefit will be 35% of the higher-earner’s benefits.
When Is The Best Time To File For Social Security Benefits
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Deciding the age at which you will begin to collect Social Security is likely to be a big factor in your retirement planning. Many retirees look forward to the day that they can apply for the benefits theyve spent their whole careers paying for. However, if you have a substantial nest egg and dont need the extra funds immediately, it may be in your best interest to wait a few years before claiming your benefits.
You Qualify To Receive Benefits As A Child
Qualifying children can get benefits based on a parent’s work record, in some cases. To get benefits, the child must be unmarried and either under age 18, a high school student age 18 or 19, or disabled with a disability that started prior to reaching age 22. Also, the parent must be getting Social Security benefits of some kind.
Most retirement-age parents don’t have minor children, so these benefits are more common in situations involving disability benefits. However, in some cases, the added money available for qualifying children can make a difference in the optimal decision of when the parent should file for Social Security retirement benefits.
Collecting Social Security Before Or After Your Full Retirement Age
If you begin collecting Social Security at age 62 and your full retirement age is 66, the check you receive will be about one-quarter less than the amount you would have received at full retirement age. If you are the sole breadwinner in your household, your spouse could be negatively affected as well. If you begin collecting before your full retirement age, the amount of money your spouse would receive after your death decreases.
Social Security Benefit Repayment
If you withdraw your application, you must repay what you have received so far. Be aware that this also includes benefits that your spouse or children received. You will also have to repay any federal tax that was voluntarily withheld from your benefit, as well as money withheld for Medicare Part B, C, and D premiums. If you spent some or all of the income you received, think about whether you can afford to pay it back.
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.
You’re Married To A Social Security Recipient And Caring For A Qualifying Child
Spouses of workers receiving Social Security can get benefits regardless of age if they’re caring for the recipient’s child. To get benefits under this provision, the child must be under age 16 and also receiving Social Security benefits.
Note that divorced spouses can also take advantage of this provision, and it even makes getting spousal benefits as a divorced spouse easier. If you’re caring for your ex-spouse’s child who is under age 16 or disabled, then your marriage doesn’t need to have lasted for 10 years or more in order to get benefits based on your ex-spouse’s work history.