Wednesday, May 18, 2022

How Early To Sign Up For Social Security

Don't Miss

When Should You Retire

Medicare: Signing Up with the Social Security Administration

To draw full retirement benefits, the following Social Security Administration age rules apply:

Born in 1937 or earlier – Full retirement can be drawn at age 65Born in 1938 – Full retirement can be drawn at age 65 years and 2 monthsBorn in 1939 — Full retirement can be drawn at age 65 years and 4 monthsBorn in 1940 — Full retirement can be drawn at age 65 years and 6 monthsBorn in 1941 — Full retirement can be drawn at age 65 years and 8 monthsBorn in 1942 — Full retirement can be drawn at age 65 years and 10 monthsBorn in 1943-1954 — Full retirement can be drawn at age 66Born in 1955 – Full retirement can be drawn at age 66 and 2 monthsBorn in 1956 — Full retirement can be drawn at age 66 and 4 monthsBorn in 1957 — Full retirement can be drawn at age 66 and 6 monthsBorn in 1958 — Full retirement can be drawn at age 66 and 8 monthsBorn in 1959 — Full retirement can be drawn at age 66 and 10 monthsBorn in 1960 or later — Full retirement can be drawn at age 67

Remember that while you can begin drawing Social Security retirement benefits at age 62, your benefits will be 25 percent less than what they will be if you wait until your full retirement age as shown above. Also keep in mind that no matter when you start drawing Social Security benefits, you must be 65 to be eligible for Medicare.

For example, people who waited until age 70 to retire in 2017 could get a maximum benefit of $3,538.

Maximize Your Average Wages

Social Security is designed to replace around 40% of pre-retirement wages. To make sure your benefits are comparable to the amount you earned — and paid into the system — the Social Security Administration keeps track of your wages over your career.

The SSA then adjusts each year’s earnings to account for wage growth and calculates your Average Indexed Monthly Earnings during the 35 years your earnings were highest. Your benefits ultimately equal a specific percentage of your AIME.

A higher AIME means a larger Social Security benefit. You can raise your AIME in two ways:

  • Boosting your income throughout your career by taking on side jobs, developing your skills, continually seeking out new opportunities at work, and advocating effectively for yourself during salary negotiations.
  • Working for at least 35 years, or longer in many cases. A career history shorter than 35 years will result in a lower AIME because the Social Security Administration will factor in $0 in wages for each year you fall short. A longer history can result in a higher AIME if you earn more later in life, and these higher-earning later years end up included in your average instead of lower-earning early ones.

Taking either or both steps can result in a substantially larger benefit than might have otherwise been available if you’d had more years of low earnings included in your AIME.

Your Monthly Social Security Benefits Increase The Longer You Wait To Claim

You can collect Social Security benefits as soon as you turn 62, but taking benefits before your full retirement age means a permanent reduction in your payments of as much as 25% to 30%, depending on your full retirement age.

If you wait until you hit full retirement age to claim Social Security benefits, youll receive 100% of your earned benefits. But you can also get a big bonus by waiting to claim your Social Security benefits at age 70 your monthly Social Security benefit will grow by 8% a year until then. Any cost-of-living adjustments will be included, too, so you don’t forgo those by waiting.

Waiting to claim your Social Security benefits can help your heirs as well. By waiting to take her benefit, a high-earning wife, for example, can ensure that her low-earning husband will receive a much higher survivor benefit in the event she dies before him. That extra income of up to 32% could make a big difference.

Don’t Miss: How Much Social Security Can I Expect

When Does It Pay To Enroll In Medicare Before Social Security

You might assume that it pays to sign up for Social Security prior to Medicare, but in many cases, it actually pays to enroll in Medicare first.

Unless youre disabled, you wont be able to enroll in Medicare prior to age 65. And unless youre continuing to work and receive employer-sponsored coverage, theres no benefit to delaying your Medicare enrollment more than three months after you turn 65.

So in almost all cases, your Medicare enrollment window will correspond closely with your 65th birthday, and the coverage you receive under the program wont vary based on when you enroll. But the age at which you sign up for Social Security will dictate what your monthly benefits under Social Security amount to.

Your Social Security benefits are calculated with a formula that uses your average inflation-adjusted monthly wage over your 35 highest-paid years in the workforce. Your resulting monthly benefit will be available to you in full once you reach whats known as full retirement age. That age is currently between 66 and 67, depending on your year of birth.

If you file for Social Security prior to full retirement age, your benefits will be reduced for each month you claim them early. You can also delay your Social Security benefits past full retirement age and boost them by 8% a year in the process, up until age 70, which is generally considered the latest age to claim Social Security.

Social Security Secrets For Even Bigger Checks

How to Maximize Social Security Spousal Benefits

    Want a bigger Social Security benefit? Increasing the amount of money your retirement checks offer can be a smart financial move since they’ll probably be a primary income source along with your savings.

    But is it possible to raise your Social Security benefit? The answer is yes, though it may require some sacrifice on your part. Here are three key steps you’ll need to take if you want bigger checks.

    You May Like: Socialsecrity

    You’re Concerned Social Security Will Disappear

    Some people are concerned about potential Social Security changes in the future, such as higher retirement ages, lower benefits or higher taxes on benefits. As a result, they want to take the sure thing as soon as possible. In a 2017 Social Security summary, the government said Social Security trust funds will be depleted in 2034. Even then, however, annual Social Security taxes are projected to keep benefits at almost three-fourths of current levels.

    • Tax season is officially upon us, and the IRS has tools to make filing a little easier. IRS Free File is a free online tool that allows you to prepare and file your federal income taxes. The service…

    • GOBankingRates

      If you bought personal protective equipment — such as masks, hand sanitizer and sanitizing wipes — for the purpose of preventing the spread of COVID-19 in 2021, you may be eligible for a tax…

    • GOBankingRates

      Costco is known as a low-price leader, but as the big-box and warehouse store landscape becomes more and more competitive, it’s getting harder to find unbeatable deals. Despite this, Costco still has…

    • GOBankingRates

    Consider Your Personal Circumstances

    There are many factors you should consider when deciding when to start receiving your CPP retirement pension. These include your health, your financial situation, and your plans for retirement.

    For example, if youre healthy, expect to live a long life, or have access to other sources of income, you may choose to start receiving your CPP retirement pension later. This will result in a larger monthly pension, which could help protect you from outliving your savings.

    However, if youd prefer to work less, or you want the money now to pay off debts or to fund your retirement plans, you may choose to start receiving your pension before age 65. This will result in a smaller monthly payment which can help meet immediate needs, especially if you have little or no other income.

    The Canadian Retirement Income Calculator can also help you better understand your future financial security.

    Recommended Reading: How Much Social Security Will I Receive At 65

    When Can You File For Social Security

    The earliest when you can apply for Social Security benefits is at age 61 and nine months, and you can expect to receive your first payment four months laterthe month after your birthday. Typically, Social Security benefits are paid the month after they are due or must be specified. For example, the Social Security website states that an individual who wants their benefits to start in May will receive their first benefit check in June.

    For example, if you turn 62 on Dec. 15, then your first full month of eligibility is January, and your payment for that month will arrive in February. If you have already reached age 62 and met all other eligibility criteria, then you may begin collecting benefits in the same month when you apply if you specify, although your first payment still would not arrive until the following month.

    While You Can Start Collecting Benefits At Age 62 Should You Collect Early Or Delay

    My Social Security | How to Create an Account – 2021 Update

    Selects editorial team works independently to review financial products and write articles we think our readers will find useful. We may receive a commission when you click on links for products from our affiliate partners.

    For many elderly people, Social Security benefits make up one of their primary sources of income in retirement. For half of seniors, Social Security comprises about half of their retirement income, according to the Center on Budget and Policy Priorities. Some studies estimate that without Social Security, between 30% and 40% of senior citizens would be considered below the poverty line.

    The age at which you decide to collect your Social Security benefits has a big impact on how much you’ll earn from the program over time because the longer you wait, the higher your monthly payout will be.

    “Don’t just call Social Security and apply at age 62. Everybody has options. A married couple could receive $1 to $1.5 million in benefits over their lifetime. And single people could maybe half of that,” says Marc Kiner, a CPA at Premier Social Security Consulting. “And do not assume that Social Security will review your options with you.”

    Select spoke to Kiner and Jim Blair, the lead consultant at Premier, about some of the factors you should consider when deciding when to apply for Social Security benefits.

    Our best selections in your inbox. Shopping recommendations that help upgrade your life, delivered weekly. Sign-up here.

    Recommended Reading: Who Doesn T Get Social Security

    When Should I Sign Up For Medicare

    Generally, we advise people to file for Medicare benefits 3 months before age 65. Remember, Medicare benefits can begin no earlier than age 65. If you are already receiving Social Security, you will automatically be enrolled in Medicare Parts A and B without an additional application. However, because you must pay a premium for Part B coverage, you have the option of turning it down. You will receive a Medicare card about two months before age 65. If you would like to file for Medicare only, you can apply by calling 1-800-772-1213. Our representatives there can make an appointment for you at any convenient Social Security office and advise you what to bring with you. When you apply for Medicare, we often also take an application for monthly benefits. You can apply for retirement benefits online.

    If you didnt sign up when you were first eligible for Medicare, you can sign up during the General Enrollment Period between January 1 and March 31 each year, unless you are eligible for a Special Enrollment Period.

    Working While Receiving Benefits

    You may work after you start receiving benefits, which could mean a higher benefit for you in the future. We may withhold some of your benefits if you earn more than the yearly earnings limit. Sometimes people who retire in mid-year already have earned more than the annual earnings limit. However:

    • We have a special rule that applies to earnings for one year, usually the first year you begin receiving benefits. This means we cannot withhold benefits for any month we consider you retired, regardless of your yearly earnings.
    • After you reach full retirement age, we will recalculate your benefit amount to take into account any months you did not receive benefits because your earnings were too high.

    Don’t Miss: What Will I Get From Social Security

    How Does Retirement Income Work

    Typically, retirement income comes from the money you put away during your working years. When you invest this money in reliable sources, it will grow over time and increase in value when you hit retirement.

    Nonetheless, many Americans rely on Social Security as their primary form of retirement income.

    Social Security is a federally run insurance program that provides retirees with retirement income.

    The average monthly Social Security benefit for a retired worker comes to around $1,413, or just under $17,000 a year.

    Although it is possible to survive on Social Security alone, its not enough to maintain a comfortable lifestyle, let alone thrive in most parts of the US.For this reason, we recommend creating a retirement income strategy that does not rely on Social Security alone.

    What Is The Break Even Point And Why Is It Important

    Pin on Social Security, Medicare, Disability (Middle Class)

    Whenever you wait until age 70 to collect benefits, you’ll be missing out on the years you weren’t receiving payments. If you’re deciding when to collect, you might consider calculating your break even point.

    Your break even point tells you at what age you’ll receive more in total Social Security earnings, by collecting at full retirement age or at age 70, than you would have had you collected benefits early.

    For many people, the breakeven point is around 12 and ½ years after age 70 or full retirement age, says Blair.

    For example, if you collected early at age 62 rather than delay until your full retirement age of 67, you would be earning an additional five years worth of benefits. However, if you collected at 62, your benefit would be reduced by 30%. An individual collecting at age 67 would need to survive around another 12 years after collecting benefits to ‘break even’ compared to getting payouts starting at age 62.

    You can calculate your own break even number, but note that the number might not be accurate if you don’t consider factors like the cost of living adjustment or having a spouse, divorced spouse or survivor’s benefit.

    You May Like: How Much Money Will I Get From Social Security When I Retire

    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

    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.

    Continue Working

    You May Like: Social Security Age 70 1 2

    Social Security Benefits If Youre Married

    Determining Social Security calculations is a bit more complicated if you are married because you have the option to base benefits on your spouses salary history.

    If the lesser earning spouses benefits are based on the higher earning spouses, then the limit of those earnings will be 50 percent of the higher earning spouses benefit amount.

    To illustrate this, lets talk about A and B, a married couple.

    • A makes significantly more money than B.
    • A makes so much more money that As monthly Social Security benefits are going to be more than twice of Bs, based on Bs salary history.
    • The good news for B is that they can choose to have their Social Security benefits based on As salary history and can receive as much as 50 percent of As monthly benefit. This is the case even if B didnt hold a job outside the home.

    On the other hand, if Bs monthly benefit would have been more than half of As, based on Bs salary history, then B can claim that amount.

    In short, B can claim the higher of these two possibilities: Bs own Social Security earnings or half of As.

    This all assumes that B doesnt begin claiming benefits until B reaches full retirement age. If B begins claiming earlier, then Bs benefits will be less. In addition, if B is claiming benefits based on As earnings, then B does not benefit by waiting later than full retirement age.

    B will not be given more monthly benefits if B waits until age 70, for example, based on As earnings.

    More articles

    Popular Articles