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How Old To Get Full Social Security

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How Your Social Security Benefits Are Calculated

When Can I Retire and Collect Social Security? What’s The Best Age?

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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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.

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

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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.

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Social Security Benefits If Youre Married

Social Security denies woman

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.

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Earliest Normal Social Security Eligibility Age: 62

Even though you can begin receiving benefits as early as 62, that doesn’t mean you should start taking them at that age. This is primarily because you will receive reduced benefits. If you want a larger amount of guaranteed income later in retirement, then waiting to begin benefits until you are a few years older will make sense. Remember, even if you are retired, you can wait until you’re 70 to apply for Social Security so that you get a higher benefit. It is one of the best ways to make sure you have a higher amount of inflation-adjusted income later in life.

Also, if you take Social Security at this early age and you have earnings above the Social Security earnings limit, your Social Security benefits will be reduced. Once you reach full retirement age , there is no reduction in benefits for continuing to work, no matter how much you make.

You can apply for Social Security retirement benefits any time after you reach 62. Once you reach 62, think of it like open enrollment you can begin at any time and do not have to wait until another age cut off.

What To Consider When Deciding The Best Age For Social Security Benefits

Youll receive reduced monthly benefits permanently if you start taking them before you reach full retirement age. And the reductions arent small. This breakdown summarizes how much you can lose depending on when you get your retirement benefits:

  • Benefits are reduced by 30% if you opt to start receiving benefits just five years early.
  • If you wait until you full retirement age youll receive 100% of your benefits.
  • You can also elect to postpone benefits beyond full retirement age, up until you are 70.
  • The monthly amount you will receive in the future increases each month you wait to start receiving benefits.
  • If you can wait until the last possible month, your check will be 132% of the full retirement benefit.

For a fuller comparison, this table from the Social Security Administration shows how much you could get if you retire at age 62 based on your birth year:

Social Security Administration Early Retirement at Age 62
Birth Year
30%$700

So, its almost always best to delay Social Security benefits for as long as you can. If you plan to work in retirement, youll definitely want to delay. Youll face a penalty if you continue to work after you claim early retirement benefits and earn more than the yearly earnings limit, which for 2020 is $18,960. This means that the Social Security Administration will deduct $1 from benefits for every $2 that you earned over $18,960.

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American workers become eligible for Social Security benefits as early as 62 years old, which is known as early retirement age. The amount of Social Security benefits a worker will receive is determined by the amount of credits earned and the age a worker retires.

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Spouses Who Dont Qualify For Their Own Social Security

When is YOUR Full Retirement Age for Social Security?

Spouses who didnt work at a paid job or didnt earn enough credits to qualify for Social Security on their own are eligible to receive benefits starting at age 62 based on their spouses record. As with claiming benefits on your own record, your spousal benefit will be reduced if you take it before reaching your FRA. The highest spousal benefit that you can receive is half of the benefit that your spouse is entitled to at their FRA.

While spouses get a lower benefit if they claim before reaching their own FRA, they will not get a larger spousal benefit by waiting to claim after their FRAsay, at age 70. However, a nonworking or lower-earning spouse may get a larger spousal benefit if the working spouse has some late-career, high-earning years that boost their benefits.

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Change In How You Report Earnings

The Social Security Administration bases its benefit calculations on earnings reported on W-2 forms and on self-employment tax payments. Most individuals are not required to send in an estimate of earnings.

However, the Social Security Administration does request earnings estimates from some recipients: those with substantial self-employment income or those whose reported earnings have varied widely from month to month, including people who work on commission. Toward the end of each year, Social Security sends those people a form asking for an earnings estimate for the following year. The agency uses the information to calculate benefits for the first months of the following year. It will then adjust the amounts, if necessary, after it receives actual W-2 or self-employment tax information in the current year.

Once a beneficiary reaches full retirement age, his or her income will no longer be checked. Because there is no Social Security limit on how much a person can earn after reaching full retirement age, there is nothing to report.

Tips For Retirement Planning

  • As you approach retirement, you may be uncomfortable keeping your savings in the stock market. In that case, you may want to buy an annuity. A financial advisor can help you determine what makes the most sense. Finding a qualified financial advisor doesnt have to be hard. SmartAssets free tool matches you with up to three financial advisors in your area, and you can interview your advisor matches at no cost to decide which one is right for you. If youre ready to find an advisor who can help you achieve your financial goals, get started now.
  • Even after you max out your benefits, chances are Social Security wont pay as much as what you earned. To make up the difference, youll need to draw on your nest egg. To find out how large a nest egg youll need, use our award-winning retirement calculator.

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Watch How Much You Earn In The Years Preceding Full Retirement

The SSA has imposed earning limits for individuals who have entered early and full retirement. Those limits, and the impact on your earnings, depend on how close you are to your full retirement age.

In 2021, an early retiree can make $18,960 in gross wages or net self employment earnings without penalty. Any overage will result in $1 deducted from the Social Security check for every $2 earned above this amount. Once you reach the year of your full retirement age, you can bring in $50,520 prior to the month of your full retirement birthday without penalty. For every $3 earned above this amount, the SSA will deduct $1 from your Social Security payment. These limits also affect the amounts family members can receive from your claim.

Once youve reached full retirement age, earnings do not impact your benefits.

How Much Can I Earn If I Work After My Full Retirement Age

USA Social Security Card Template Psd

If you continue to work after reaching full retirement age, you may work and earn as much as you’d like. You will not be subject to the retirement earnings test, and your Social Security benefits will not be affected.

If you work prior to FRA, you may forfeit part of your benefits if you earn above annual thresholds. However, your benefit amount will be recalculated at full retirement age to account for most of those forfeited funds.

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The Maximum Social Security Benefit And How To Get It

As mentioned above, in 2021, the maximum Social Security benefit is $3,113 per month if you started receiving benefits at full retirement age . Theres only one way to get more than that: wait until age 70 to receive the true maximum benefit of $3,895. But for most people, receiving even $3,113 is a stretch. Heres what you would need to do to maximize your benefit.

Can I Work After Full Retirement Age

Beneficiaries are free to continue working while taking their Social Security benefits, no matter what age they start taking those benefits. However, working and taking Social Security benefits before reaching full retirement age may affect your benefits.

If you start taking Social Security early but keep working, youre subject to whats called an earnings test. For every $2 you earn over $18,960, you will see $1 withheld in Social Security benefits. And in the year you reach full retirement age, this limit changes to $1 in benefits for every $3 you earn above $50,520 up to the month of your birthday.

Once you reach full retirement age, though, you can keep every dollar of your Social Security benefits, no matter how much income you bring in. Your future benefits will also be adjusted to include the money that the earnings test previously factored out.

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The Year You Were Born Determines When You Become Eligible For Your Full Social Security Retirement Benefit Use Our Calculator To Determine Your Full Retirement Age

Waiting until your full retirement age to collect Social Security can have a big financial payoff.

If you wait until your full retirement age, you are eligible to collect 100% of your Social Security retirement benefit. Initially, when the Social Security Act was signed into law in 1935, that age was 65. However, a law passed in 1983 gradually increased the retirement age to 67. You do have the option to take your benefits early, which will reduce your checks, or delay until past your full retirement age, netting you a bigger benefit.

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When is your FULL retirement age?

It depends on the year you were born.

Enter your 4-digit birth year below:

Your full retirement age is:

Note: If your birthday is January 1st, the Social Security Administration uses the previous year to determine your full retirement age. Example: If your birthday is Jan. 1, 1960, the year used to determine your full retirement age is 1959.

Doing A Breakeven Analysis And Other Ways To Decide How Soon To Start

7 GOOD REASONS to File for Social Security Benefits at Age 62

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        If youre about to retire, you may be wondering whether you should start claiming your hard-earned Social Security benefits now. Here are a few key factors to consider in making that decision.

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        There Are Social Security Survivor Benefits For Spouses And Children

        If your spouse dies before you, you can take a Social Security survivor benefit. However, that won’t be in addition to your own benefit. You must choose one or the other. If you are at full retirement age, that benefit is worth 100% of what your spouse was receiving at the time of his or her death .

        A widow or widower can start taking a survivor benefit at age 60. However, the payment will be reduced because it’s taken before full retirement age. If you remarry before age 60, you are not eligible for a survivor benefit. If you remarry after age 60, you may be eligible for a survivor benefit based on your former spouse’s earnings.

        Eligible children who are under age 18 or were disabled before age 22 can also receive a Social Security survivor benefit. It would be worth up to 75% of the deceased’s benefit.

        What Age Should You Collect Social Security

          When it comes to retirement planning, you may have heard a lot about the benefits of tax-advantaged retirement accounts, how to choose investments, and maybe some of the details of any pension plans that you’re fortunate enough to have. But what about Social Security? After all, it provides the majority of retirement income for many Americans.

          There’s really only one big decision you have to make about Social Security and that’s when to take it. Regardless of your full Social Security retirement age, which ranges from 65 to 67, you can collect retirement benefits as early as age 62 as long as you’ve paid into the program for at least 40 quarters or about 10 years.

          However, for each year you delay, your benefit increases by about 8% until age 70. Is it worth the wait? Let’s look at some factors to consider.

          When do you plan to retire?

          You can receive Social Security benefits once you’re eligible even if you’re still working, but there are a couple of downsides to this. The first is that your wages can cause more of your Social Security income to be taxed.

          The second downside is that if you’re under your full retirement age, you lose $1 for every $2 you earn above the earnings limit, which is $18,240 this year. Once you reach full retirement age, your benefits are recalculated to recoup those lost benefits but it can take up to 15 years to break even.

          Do you have assets to draw from while you delay benefits?

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