Thursday, May 19, 2022

How Is My Social Security Amount Determined

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Get Ssa Benefits While Living Overseas

How Social Security benefits are calculated on a $60,000 salary

U.S. citizens can travel to or live in most, but not all, foreign countries and still receive their Social Security benefits. You can find out if you can receive benefits overseas by using the Social Security Administrations payment verification tool. Once you access the tool, pick the country you’re visiting or living in from the drop-down menu options.

How Your Social Security Benefits Are Earned

To be eligible for Social Security benefits in retirement, you must earn at least 40 “credits” throughout your career. You can earn as many as four credits each year, so it takes 10 years of work to qualify for Social Security.

In 2021, you must earn $1,470 to get one Social Security work credit and $5,880 to get the maximum four credits for the year.

What You Should Know About Full Retirement Age

As soon as you clock at age 62, you can apply and start receiving your social security benefit after divorce. You will only be getting half of the full social security at this age. In other words, your benefits will be reduced by a certain percentage monthly till your full retirement age.

However, you are eligible for the full benefits when you reach your full retirement age, between 66 and 67. If you delay your social security benefits till the full retirement age of age 70, your benefit amount automatically increases.

To know how your social security will be affected if you start receiving benefits from age 62 till your full retirement age, check the following table as given by the social security administration:

Normal retirement age

1960 after 67

If you were born before February, you should check the previous year. That means if your date of birth falls on Jan. 1, your social security is calculated as if you were born in December of the last year.

Generally, it is best to reach your full retirement age before taking your spousal social security. Longer delays of your social benefits after your full retirement age attract delayed retirement credits. This credit automatically increases your monthly benefit.

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Are Social Security Benefits Taxable

If you have a lot of income from other sources, up to 85% of your Social Security benefits will be considered taxable income. If the combination of your Social Security benefits and other income is below $25,000, your benefits wonât be taxed at all. The amount of your benefits that is subject to taxes is calculated on a sliding scale based on your income. Money that Social Security recipients pay in income taxes on their benefits goes back into funding Social Security and Medicare.

If your retirement income is high enough that your benefits are taxable, how do you pay those benefits? You can ask Social Security for an IRS Voluntary Withholding Request Form if youâd like the government to withhold taxes from your Social Security benefits. Otherwise, youâre expected to file quarterly tax returns to pay these taxes over the course of the year.

That covers federal income taxes. What about state income taxes? That depends. In 13 states, your Social Security benefits will be taxed as income, either in whole or in part the remaining states do not tax Social Security income.

By Step: How Are Social Security Benefits Calculated

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If you qualify for Social Security benefits, you can arrive at a reasonable estimate for Social Security benefits by completing five easy steps, which I’ll describe below. You can understand your Social Security benefits by thinking through your retirement age, your earnings, and your post-retirement plan for earning additional income .

1. Total earnings: The SSA determines the total amount you earned in the 35 years during which you made the most money, up to a maximum amount per year. The limit is adjusted for inflation — in 1951, the limit was $3,600. In 2018, it’s $128,400.

If you worked fewer than 35 years, the missing years are counted as zero. For example, if you worked a total of 20 years, the SSA would add up your income from all 20 years you worked and then factor in 15 years of zero pay.

2. Average indexed monthly earnings: The resulting sum from Step 1 is divided by 420 months and rounded down to the nearest dollar to find your average indexed monthly earnings .

3. Benefit at full retirement age : Your benefit is based on a three-tiered percentage of your AIME. Confusingly, though, the formula is based on the year when you first become eligible for Social Security. For those who first become eligible for Social Security in 2018, the benefit is calculated as follows:

The sum is your estimated monthly retirement benefit at your full retirement age.

Example:If your AIME is $5,500, then your benefit is calculated as follows:

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When Will You Collect

The SSA calculates your benefit amount at your full retirement age . This depends on the year you were born. FRA by birth year is:

  • 19431954: age 66
  • 1955: age 66 and two months
  • 1956: age 66 and four months
  • 1957: age 66 and six months
  • 1958: age 66 and eight months
  • 1959: age 66 and 10 months
  • 1960 and later: age 67

The monthly amount you are eligible to receive at your FRA is considered your full benefit, but it is not your minimum or maximum benefit.

You have the option to file for early retirement as early as age 62. But, you may choose to delay taking your benefits until as late as age 70.

There are many reasons why you might choose to take early retirement or to delay it. That choice has a direct impact on the amount of your monthly payment. If you opt for early retirement, you are choosing a lower monthly payment for the rest of your life. By choosing to delay your benefit to any age between your FRA and age 70, you lock in an increase.

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.

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Get Help With Social Security

If you are planning to file for Social Security, and want to make sure you get all the benefits you deserve, you need to realize this is not a DIY project. There are thousands of possible filling combinations and nuanced rules that make each situation different and in most cases, you only get one chance to make a good decision.

Theres no way around ityou need to get professional help before you file. You can get started with a free 15-minute consultation from my team of Registered Social Security Analysts. Theyll listen to your unique situation and let you know how a strategic plan can cut through all the complexity and give you clear direction on your filing strategy. Schedule your call today!

What Is A Social Security Card

How Social Security benefits are calculated on a $35,000 salary

Your Social Security card is an important piece of identification. You’ll need one to get a job, collect Social Security, or receive other government benefits.

When you apply for a Social Security number , the Social Security Administration will assign you a nine-digit number. This is the same number that is printed on the Social Security card that SSA will issue you. If you change your name, you will need to get a corrected card.

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Suspend And Restart Your Benefits

If you’re between your full retirement age and 70 and are already receiving benefits, you can still stop your monthly checks now and restart them later in order for your benefits to start growing again.

The bump-up you will receive is the delayed retirement credit for the time your benefits were suspended.

But beware: If your spouse or children are receiving benefits based on your record, their checks will also stop. And their benefits will not grow during that time, with the exception of adjustments for inflation, Kotlikoff said.

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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Fact #: Social Security Is More Than Just A Retirement Program It Provides Important Life Insurance And Disability Insurance Protection As Well

Over 64 million people, or more than 1 in every 6 U.S. residents, collected Social Security benefits in June 2020. While older Americans make up about 4 in 5 beneficiaries, another one-fifth of beneficiaries received Social Security Disability Insurance or were young survivors of deceased workers.

In addition to Social Securitys retirement benefits, workers earn life insurance and SSDI protection by making Social Security payroll tax contributions:

  • About 96 percent of people aged 20-49 who worked in jobs covered by Social Security in 2019 have earned life insurance protection through Social Security.
  • For a young worker with average earnings, a spouse, and two children, thats equivalent to a life insurance policy with a face value of over $725,000 in 2018, according to Social Securitys actuaries.
  • About 89 percent of people aged 21-64 who worked in covered employment in 2019 are insured through Social Security in case of severe disability.

The risk of disability or premature death is greater than many realize. Some 6 percent of recent entrants to the labor force will die before reaching the full retirement age, and many more will become disabled.

Determine Wages For Each Year You Worked

How Social Security Retirement Benefits Are Determined

You can get your earnings records from the Social Security Administration. Simply sign into mySocialSecurity and click “View Earnings Record.” You will need to create an account if you don’t already have one.

Your earnings record will list your wages for every year you worked and paid into the Social Security system. However, you’re only given credit for wages you paid Social Security tax on.

There’s a maximum annual limit on wages subject to Social Security tax. No income earned above the annual limit counts toward determining your benefits. In 2019, the maximum earnings subject to Social Security tax are $132,900. If even if you earned $132,900.01 or above, wages for 2019 for Social Security purposes would be recorded as $132,900.

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Am I Entitled To My Ex

Yes, you have a right to social security benefits after divorce. Once you are divorced and were married for up to ten years, you or your ex-spouse can benefit from social security benefits after divorce.

You can also file for spousal social security based on your work records as a divorcee for at least two years.

If You Need Help With An Application For Social Security Disability Benefits

SSDI and SSI benefits provide a vital financial lifeline for individuals who are unable to work due to physical or mental disabilities. If you are applying for Social Security disability benefits, you need to speak with an experienced Social Security disability attorney as soon as possible to ensure that your application thoroughly documents your condition and your legal right to benefits. Please contact us online, or call our Virginia Beach office to schedule your free consultation. We have offices throughout Virginia, including Chesapeake, Newport News, Norfolk, and Suffolk.

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What Factors Affect Social Security Benefits

The biggest factor in how much you will receive in Social Security benefits is how much you earned while you were working. For Social Security purposes, what matters is the average amount you earned during your highest-earning 35 years before age 62, adjusted for cost-of-living increases.

The age at which you start taking benefits also affects how much you receive per month once you start. The longer you wait to start taking benefits, up to age 70, the higher your monthly benefits will be.

If you have earned income in the same year you receive benefits and you either have not reached full retirement age or reached full retirement age that year, then your Social Security benefits may be reduced.

Your benefits may also be affected by different types of earnings, and a pension received from a job in which you did not pay Social Security taxes will reduce your benefit.

You Can Claim Social Security Benefits Earned By Your Ex

How is my Social Security benefit calculated?

Just because you’re divorced doesn’t mean you’ve lost the ability to get a Social Security benefit based on your former spouse’s earnings. You can receive a benefit based on his or her record instead of a benefit based on your own work record if you were married at least 10 years, you are 62 or older, and you are single.

Like a regular spousal benefit, you can get up to 50% of an ex-spouse’s benefit — less if you claim before full retirement age. And the beauty of it is that your ex never needs to know because you apply for the benefit directly through the Social Security Administration. Taking a benefit on your ex-spouse’s record has no effect on his or her benefit or the benefit of your ex’s new spouse. And unlike a regular spousal benefit, if your ex qualifies for benefits but has yet to apply, you can still start collecting Social Security based on the ex’s record, though you must have been divorced for at least two years.

Note: Ex-spouses can also take a survivor benefit if their ex died after the divorce, and, like any survivor benefit, it will be worth up to 100% of what the ex-spouse received. If you remarry after age 60, you are still eligible for the survivor benefit.

A claiming strategy if youre divorced: Exes at full retirement age who were born on January 1, 1954, or earlier can apply to restrict their application to a spousal benefit while letting their own benefit grow.

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Back Payments And Retroactive Payments Are Often Included Once You Are Approved

When you are approved for SSDI or SSI, you are often approved with back payments or retroactive payments included. Back payments are any disability benefits that are past due, or the benefits that you would have been paid if your initial application was approved right away.Retroactive payments are for the months that you were disabled and could not work. You are eligible for retroactive payments only with SSDI and not SSI.

Spouses Survivors And Dependents

Spouses, survivors and qualifying dependents can collect Social Security benefits based on the primary insured’s PIA.

A spouse can claim 50% of the primary worker’s full PIA if they retire at the Normal Retirement Age or if they are caring for a qualified child. A spouse who is not caring for a qualified child and who retires after 62 but before their Normal Retirement Age will get reduced benefits down to a low of 32.5% of the primary worker’s benefit.

A qualifying child can claim up to 50% of a retired worker’s benefits or, if they are a surviving child, up to 75% of a deceased worker’s benefits. However, in cases where a family has multiple claimants , the combined family benefit is capped at between 150 – 180% of the primary worker’s benefits.

Finally, a surviving spouse who has reached their Normal Retirement Age can opt to collect their deceased spouse’s benefits instead of their own. In this case, they will receive 100% of the primary worker’s benefits. A younger widow/widower who is caring for a qualified child can collect 75% of the primary worker’s benefits.

You can only collect under one benefits program. Any beneficiary who qualifies for multiple sources of income will receive the higher of their qualifying benefits.

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Checklist For Your Social Security Claiming Strategy

  • Know your numbers. Find out your FRA, earnings history, and estimated benefits.
  • Stay current. Sign up for your most current statements on SSA.gov.
  • Do the math. Use calculators on SSA.gov to check out your monthly benefit options.
  • Get the facts. Don’t succumb to myths use primary resources such as SSA.gov.

How Is My Social Security Benefit Amount Calculated

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Another common Social Security benefits question is how payments are calculated based on your lifetime earnings. To account for changes in average wages each year, the Social Security Administration , indexes your income using the national average wage index.

The SSA calculates your average indexed monthly earnings based on the 35 years in which you earned the most. A formula generates your basic benefits, otherwise known as your primary insurance amount. This primary insurance amount is what you would receive at your full retirement age. If you were born between 1955 and 1959, full retirement age is between age 66 and 67. For those born in 1960 or later, full retirement age is 67.5

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