How To Receive Federal Benefits
To begin receiving your federal benefits, like Social Security or veterans benefits, you must sign up for electronic payments with direct deposit.
If You Have a Bank or Credit Union Account:
- Call the Go Direct Helpline at .
If You Don’t have a Bank or Credit Union Account:
- Direct Express debit card – a pre-paid debit card. Get help by calling the Go Direct Helpline at .
Make Changes to an Existing Direct Deposit Account:
Learn how to make changes to an existing direct deposit account. You also may contact the federal agency that pays your benefit for help with your enrollment.
When To Apply For Social Security
As stated above, you are eligible to apply for Social Security retirement benefits when you are 61 and nine months. You can start collecting benefits as soon as you turn 62.
However, just because you can, does not mean that you should.
The longer you delay starting your benefits, the more your monthly income will be. In fact, the difference in lifetime income between starting at age 62 and waiting until your maximum retirement age can be more than $100,000 and for many people much much more.
While you can start benefits at age 62, the Social Security Administration considers that early. Depending on your birth year, you do not reach what the SSA calls full retirement age until sometime between ages 66 and 67.
- For every month prior to your full retirement age that you begin taking benefits, around 0.55% is deducted from your payout.
- And, for every year that you defer your benefits, you will receive a larger amount when you finally do begin drawing Social Security. The amount of the bonus is dependent, once more, on your birth date. For example, someone born in 1944 has a full retirement age of 66. If they start benefits at age 69, they will receive eight percent more benefits for each year they delay.
Tax Considerations For Social Security Benefits
How do these tax considerations affect when you should apply for Social Security benefits? At todays , they may not have much of an impact on most people. Still, tax rates and income thresholds can change, so its worth remembering that you will lose less of your Social Security to taxes if you are in a lower marginal tax bracket when you begin to collect.
You should also note that if you decide to return to work, even part-time, and arent yet at your FRA, your Social Security benefits may be temporarily reduced. The reduction is $1 for every $2 of earned income over $18,960 in 2021 . During the year when you reach your FRA, your benefits will be reduced by $1 for every $3 in income over $50,520 in 2021 until the month when you become fully eligible. That money isnt lost, however. The SSA will credit it to your record when you reach your FRA, resulting in a higher benefit.
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How Social Security Approval Works
When you retire, a lot of questions cross your mind. The first question you should ask is when to claim social security benefits. See our article on When to Claim Social Security Benefits.
The next question after you decide to claim is: how long does it take to get my first social security check? It would be prudent to start by knowing how long it takes to apply for social security online. To your relief, the process will not take a lot of your time. Once your application is done and submitted, you will be wondering how long it takes to get social security approval.
Typically, it takes 6 weeks to process your application and for the benefits to start. However, it will take longer if you submit incorrect information. Also, the duration for approval will depend on the number of submissions the Social Security Administration will be processing at the time. Overall, the wait time is at least six weeks or longer depending on a number of factors.
You will need your social security number, birth certificate, and supporting financial documents when you apply. Tax return evidence and W-2 forms are also required for self-employed applicants.
For those not born in the USA, you should provide proof of citizenship. A certificate of citizenship or passport will be adequate. Also, marital information will be required.
Luckily, all these documents are not required at once when you apply. The SSA will send you notifications when they are required.
What If I Take Benefits Early
If you choose to receive your Social Security check up to 36 months before your full retirement age, be aware that your benefit is permanently reduced by five-ninths of 1% for each month.
If you start more than 36 months before your full retirement age, the benefit is further reduced by five-twelfths of 1% per month, for the rest of retirement.
For example, let’s assume that you stop working at age 62. If your full retirement age is 66 and 2 months you elect to start benefits at age 62, the reduced benefit calculation is based on 50 months. This means that the reduction for the first 36 months is 20% and 5.83% for the remaining 14 months. Overall, your benefits would be permanently reduced by 25.83%.
Effect of early retirement on benefits
1.Represents Full Retirement Age based on DOB Jan. 2, 1955
2.PIA = The primary insurance amount is the basis for benefits that are paid to an individual
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Are You Sure You Want To Start Benefits At 62
There are plenty of great reasons to take Social Security at 62, particularly if you want to retire early or you’re no longer able to work.
But if you have the option to keep working or live off your retirement savings, holding off is often the better option. Waiting until your full retirement age, which is between 66 and 67 for people born in 1943 or later, will give you a monthly payment that’s 30% higher than you’d get by starting at 62.
Each year you delay beyond your full retirement age yields an extra 8% until you reach age 70. The difference between starting Social Security at 70 versus 62: A monthly benefit that’s 76% higher.
Also, keep in mind that your options for reversing your Social Security decision if you started benefits too early are extremely limited.
But ultimately, the best age to take Social Security depends on a lot of factors, including your health and life expectancy, your financial situation, and when your spouse is claiming.
Bottom line: If you’ve weighed all the factors and decided starting Social Security at 62 makes sense for you, apply at least three months before your birthday. You won’t get your first payment in time for your big day, but you can have an encore celebration when it hits your bank account.
What Is Full Retirement Age
The size of your monthly Social Security benefit depends on a few factors, including how much you earned over the years, the year you were born, and the age when you start claimingdown to the month.
Youll receive your full monthly benefit if you start claiming when you reach what Social Security considers your full retirement age , sometimes also referred to as normal retirement age. FRA was 65 when Social Security began, but it has been raised to 67 for anyone born in 1960 or later. To find your FRA, see the chart below.
|Finding Your Full Retirement Age|
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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.
Obtain Proof Of Employment Eligibility
To be eligible for an SSN, you must provide proof of employment to the Social Security Administration. You must have this documentation in hand before you apply for an SSN. The type of proof varies with the type of work authorization you have:
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Working While Collecting Social Security Retirement
Many people choose or need, to keep working after claiming Social Security retirement benefits. However, if you continue work after claiming early retirement benefits your Social Security benefits may be reduced until you reach your full retirement age.
If you retire at age 62, Social Security will deduct money from your retirement check if you exceed a certain amount of earned income for the calendar year. For example, the income limit in 2018 was $17,040 or $1,420 per month. The income limit increases annually. Until you reach your full retirement age, Security will reduce your benefit by $1 for every $2 you earn over the income limit. Once you reach your full retirement age, you will receive your full Social Security retirement benefit with no limitation on how much income you earn from working.
The worse news is that Social Security does not apply the early retirement work penalty by simply deducting a small amount from each monthly benefit check. Instead, the agency may withhold several months entire checks until the total reduction is paid off. This means your annual budget will have to account for a certain number of months without a benefit check. Complete details on this decidedly complicated process can be found in Social Securitys pamphlet on How Work Affects Your Benefits. You can also use Social Securitys earnings test calculator to see how much your reduction will be and when your checks will be withheld.
How And When To Apply For Social Security Benefits
- B.S., Texas A& M University
Applying for Social Security benefits is the easy part. You can apply online, by telephone or by walking into your local Social Security office. The hard part is deciding when to apply for your Social Security retirement benefits and rounding up all the documents you’ll need when you do.
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How To Apply For Social Security Benefits At Age 62
- If you are planning to retire at age 62, Social Security benefits can help to fund this dream. Here are some facts about early applications for Social Security.
Early retirement is a dream for many people. Social Security benefits can be an important way of achieving that dream. Understanding the application process and the consequences of early retirement on your Social Security benefits can help you make the most practical decisions about this source of income in retirement.
The Social Security Disability Application Process
You can start the Social Security disability application process online. If you prefer, you can visit your local SSA office and start the application in person by meeting with an employee face-to-face. Because of the complexity of a disability claim, an advocate or an attorney can be very beneficial in helping you win your case. You should speak with an attorney before you officially start the application.
Most claims are denied at first, and many go all the way to an administrative law judge for a ruling. However, those who have enlisted the assistance of an advocate or attorney are much more likely to have their disability claim for benefits approved.
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An Example Of Taxed Benefits
Lets say you receive the maximum Social Security benefit for a worker retiring at FRA in 2021: $3,148 per month. Your spouse receives half as much, or $1,574 a month. Together, you receive $4,722 a month, or $56,664 per year. Half of that, or $28,332, counts toward your combined income for determining whether you have to pay tax on part of your Social Security benefits. Lets further assume that you dont have any nontaxable interest, wages, or other income except for your traditional individual retirement accounts required minimum distribution of $10,000 for the year.
Your combined income would be $38,332half of your Social Security income, plus your IRA distributionwhich would make up to 50% of your Social Security benefits taxable because youve exceeded the $32,000 threshold. Now, you may be thinking, 50% of $56,664 is $28,332, and Im in the 12% tax bracket, so the tax on my Social Security benefits will be $3,399.84.
Fortunately, the calculation takes other factors into account, and your tax would be a mere $225. You can read all about the taxation of Social Security benefits in the Internal Revenue Service Publication 915.
Are There Drawbacks To Collecting Early Retirement
It is recommended that any individual who is able to delay collecting Social Security until their retirement age do so. When you begin collecting early retirement your benefit check will be less than if you had waited until your retirement year.
When considering what age to begin benefits it is very important to look at your own financial situation and needs to better determine if retiring early is an option that should be considered.
When it comes to Social Security retirement benefits, there are rarely questions that have a simple one size fits all answer. There are many factors that go into how much money you are entitled to, how much money you will receive and when.
You must also consider other sources of income and how that might affect your financial situation throughout retirement. One thing is certain for all individuals retirement planning is very important to ensure maximum benefits and protection of assets which you will rely on for the remaining years.
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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 You Apply For Social Security Survivors Benefits
If you are unable to work due to a medical condition or disability, the Social Security Administration can provide disability benefits. These benefits can help you pay medical bills and every day living expenses without making a regular income. If you are financially dependent on a worker who has died, you may be able to receive survivors benefits from the SSA to help with the costs and expenses you are left to handle.
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If You’re Ready To Start Collecting Social Security Here’s A Guide To Help You Get Started
Most Americans have the ability to start collecting Social Security retirement benefits at any time between their 62nd and 70th birthdays, but many aren’t quite sure how the application process works. Here’s how to quickly determine your eligibility and apply. The process is easier than you might think.
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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Know Your Social Security Full Retirement Age
First things first:Determine your Social Security full retirement age. For people born between 1943 and 1954, full retirement age is 66. If your birthday falls between 1955 and 1959, it gradually climbs to 67. If you are born in 1960 or later, your full retirement age is 67.
You can claim your Social Security benefits a few years before or after your full retirement age, and your monthly benefit amount will vary as a result. More on that in a moment.
How Do You Apply For Benefits
When you are ready to apply for Social Security benefits, you can apply in a number of ways. For individuals living in the United States, applications can be taken over the phone, online or by visiting a local Social Security office.
Individuals who do not reside within the United States or any of its territories must contact the nearest U.S. Social Security office, Embassy or consulate.
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