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.
Apply For Retirement Benefits
Starting your Social Security retirement benefits is a major step on your retirement journey. This page will guide you through the process of applying for retirement benefits when youre ready to take that step. Our online application is a convenient way to apply on your own schedule, without an appointment. You can also apply by phone or by appointment at a Social Security office.
Do Social Security Disability Benefits Change At Age 62
To learn how age impacts Social Security disability benefits, it helps to understand the eligibility criteria and the programs available.
How The Social Security Administration Defines Disability
When the SSA reviews your claim for disability benefits, the key factor is whether or not you are able to work to support yourself and provide for your family. This is the basis for how the SSA defines total disability, which is the only type of disability allowed under the program. Neither partial nor short-term disability meet the criteria. The SSA expects that people will be prepared for such emergencies through short-term disability insurance, workers compensation or personal savings. The determination of total disability hinges on whether or not you can perform the same work as before, if the work can be adjusted to accommodate the condition, and the projected duration of the disability.
SSI vs. SSDI
There are two types of disability programs administered by the SSA: Social Security Disability Insurance program and Supplemental Security Income program. To be eligible for SSDI, the applicant needs to have worked and earned enough credits to qualify for disability benefits. Credits are earned by working and paying Social Security taxes. This is different than SSI, a program where the applicant must demonstrate a financial need in addition to meeting the disability criteria. Those below age 19 would apply for SSI because children would not have yet accrued credits for working.
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What’s The Right Decision For You
Claiming Social Security at age 62 doesn’t make sense for everyone. If you’re low on retirement savings and have the option to keep working well into your 60s, then it might pay to snag a higher benefit and avoid a financial crunch throughout your senior years. Similarly, if you enjoy your job and are able to keep at it, then you might as well hold off on claiming Social Security so your monthly benefit can grow.
But if the above scenarios apply to you, then filing for Social Security as early as possible is a move that might serve you very well. And so it pays to consider the upside of claiming benefits once your 62nd birthday arrives.
If You Work While Getting Social Security
Yes, you can work full or part-time while also getting Social Security retirement benefits. However, if you have not yet reached your full retirement age, and if your net income from working is higher than the annual earnings limit, your annual benefits will be reduced. Beginning in the month you reach full retirement age, Social Security will stop reducing your benefits no matter how much you earn.
During any full calendar year in which you are under full retirement age, Social Security deducts $1 from your benefit payments for every $2 you earn above the annual net income limit. The income limit changes every year. In 2017, the income limit was $16,920.
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The Downside Of Claiming Early: Reduced Benefits
Consider the following hypothetical example. Colleen is 62 as of 2022. If Colleen waits until age 67 to collect, she will receive approximately $2,000 a month. However, if she begins taking benefits at age 62, she’ll receive only $1,400 a month. This “early retirement” penalty is permanent and results in her receiving up to 30% less year after year.
However, if Colleen waits until age 70, her monthly benefits will increase another 24% over what she would receive at her FRA, to a total of $2,480 per month.1 If she were to live to age 89, her lifetime benefits would be about $112,000 more, or at least 24% greater, because she waited until age 70 to collect Social Security benefits.2
Social Security Keyword Cheat Sheet:
Thats a lot of acronyms to remember, so heres a handy reference to keep track of them:
- AIME: Your average monthly earnings, in todays dollars, of your 35 highest earning years
- PIA: the amount you will receive at your full retirement age
- FRA: full retirement age67 if born 1960 or later, 66 through 66 and 10 months if born before .
- COLA : annual increases due to inflation
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When Is The Best Time To Apply For Social Security Benefits
Youve been working for a long time and its almost time to retire. Before retiring, its important to understand more about Social Security benefits and how to take advantage properly. Just like anything else, there are many moving parts, and certainly not a cookie cutter solution. We will tackle a few scenarios however, which can give you some good insights.
Its important to look at various scenarios in your personal situation, as well as speaking with a professional when needed.
How Much Income Will You Need
Another important piece of the puzzle is to look at how much retirement income you’ll need, based partly on an estimate of your retirement expenses. If there is a large gap between your projected expenses and your anticipated income, waiting a few years to retire and start collecting Social Security benefits may improve your financial outlook.
If you continue to work and wait until your full retirement age to start collecting benefits, your Social Security monthly benefit will be larger. What’s more, the longer you stay in the workforce, the greater the amount of money you will earn and have available to put into your overall retirement savings. Another plus is that Social Security’s annual cost-of-living increases are calculated using your initial year’s benefits as a base–the higher the base, the greater your annual increase.
How Social Security Approval Works
When you retire, a lot of questions cross your mind. The one question that almost every retiree asks is: how long does it take to get my first social security check? It would be prudent to start by knowing how long does it take to apply for social security online. To your relief, the process will not take a lot of your time. Now that your application is done and submitted, you will be wondering how long does it take 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 require 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 born out of the USA, you should provide proof of citizenship. A certificate of citizenship or passport will be adequate. Also, marital information and those of your children will be required.
Luckily, all these documents are not required at once when you apply. The SSA will send you notification when they are required.
Determining Your Best Benefit Options
Exemptions for Documentation
Social Security Benefits For Surviving Spouses
If your spouse was receiving Social Security benefits upon their death, you must report the death as soon as possible. You can call the Social Security Administration at 1-800-772-1213 between 7 a.m. and 7 p.m. on weekdays or visit your local Social Security office in person.
You are eligible for a one-time, lump-sum death benefit of $255 from Social Security if:
- You were receiving benefits on your spouses record at the time of death, or
- If you were living in the same household as your spouse at the time of death.
Any benefits received in the name of your spouse during the month of death or later must be returned to the Social Security Administration as soon as possible.
If your spouse worked long enough under Social Security, you may be eligible for Social Security benefits. You must be age 60 or older or disabled and 50 or older to qualify.
How much youll receive depends on the percentage of your spouses benefit as well as your age and the type of benefit youre eligible for.
You must apply for survivor benefits in person. You can call Social Security at 1-800-772-1213 to request an appointment.
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What If I Delay Taking My Benefits
If you retire sometime between your full retirement age and age 70, you typically earn a “delayed retirement” credit . For example, say you were born in 1955 and your full retirement age is 66 and 2 months. If you started your benefits at age 68, you would receive a credit of 8% per year multiplied by approximately two . This makes your benefit ~15% higher than the amount you would have received at age 66.
That higher baseline lasts for the rest of your retirement and serves as the basis for future increases linked to inflation. While it’s important to consider your personal circumstancesit’s not always possible to wait, particularly if you are in poor health or can’t afford to delaythe benefits of waiting can be significant.
If you decide to wait past age 65, you may still need to sign up for Medicare. In some circumstancesyour Medicare coverage may be delayed and cost more if you do not sign up at age 65.
Effect of late 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
To review your situation, your annual Social Security statement will list your projected benefits at age 62, full retirement age, and age 70, assuming you continue to work and earn about the same amount until age 62, full retirement age, or age 70 before retiring. If you need a copy of your annual statement, you can request one from the Social Security Administration .
When You Want To Retire
Your planned retirement date affects the best age to apply for Social Security because once you retire, if you dont apply for Social Security right away, you have to plan to make up that income somehow.
Most people plan to apply for Social Security once they retire, but this may not be the best strategy.
Based on the factors above, if the best age for you to file for Social Security is 70, but you want to retire at age 62, what do you do?
In this case, its possible to use what we call a spend down plan. The basic idea is to retire, delay taking Social Security, and spend some assets down in the meantime so that you can meet your income needs until Social Security starts.
The key is to make sure that you have enough assets to cover the spend down.
If you want to retire at 62 and the best age for Social Security is 70, you need enough assets to comfortably bridge the gap. If you dont have enough, then you must either work longer, or file for Social Security sooner.
Heres how the spend down Social Security strategy works:
We take a chunk of your portfolio assets, set them aside, and then spend them down to give us permission to delay Social Security. In many cases, this can greatly increase your chances of success in retirement.
This is just one scenario to illustrate the potential here. Every situation is unique and has to be looked at on its own. A spend down isnt right for everyone. In some cases, it may make sense to take benefits earlier.
You Have Health Issues
Beyond the raw mathematics of not having enough income, there are other legitimate reasons to begin receiving Social Security early. These reasons tend to be very case specific and often come with nuances that go well outside what a simple written checklist can adequately cover. It therefore makes sense to speak to an expert who knows your specific circumstances to determine if these reasons apply to you.
The expert who immediately comes to mind is your doctor. After income need, the status of your health comes most into play regarding your Social Security claiming decision.
Health is always a consideration, says Chuck Czajka, Founder of Macro Money Concepts in Stuart, Florida. If you dont think youre going to live until the normal mortality rate, then it might make sense for you to begin taking Social Security before the age of 70. It wouldnt make sense to wait until age 70 to get the most you can collect only to pass away shortly after.
There are actually two factors at play here. First, addressing your health issues can cost money, money you dont have. Second, theres actually a break-even analysis that goes into determining if you should wait to claim Social Security. Its a guessing game but its based on your life expectancy. In short, you need to live long enough for it to make sense for you to defer.
What Questions Will Social Security Ask Me When I Am Applying For My Benefits
You will be asked about your date of birth, your Social Security Number, any former spouse, or your current spouse. You will be asked to confirm the names of any unmarried children or any children under 19 or disabled.
You will be asked about your bank account information, your citizenship, any previous benefits you have applied for or received.
Questions about your previous or current employment, earnings the year before, and any military service will be asked.
There are many other questions you may be asked, it is best to be prepared to answer anything related to your past financial, medical, military, tax, and family history.
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What Happens If You Claim After Your Fra
If you wait until your age 70 to start claiming benefits, then youll get an extra 8% per yearor, in total, 132% of your primary insurance amount for the rest of your life. Claiming after you turn 70 doesnt increase your benefits further, so theres no reason to wait longer than that.
The longer you can afford to wait after age 62 , the larger your monthly benefit will be. Nevertheless, delaying benefits doesnt necessarily mean that youll come out ahead overall. Other factors should be considered, including your expected longevity and whether you plan to file for spousal benefits. You should also consider the tax, investment opportunity, and health coverage implications.
The Basics Of Social Security
First off, every eligible worker can begin receiving Social Security benefits at age 62, but you’ll get a reduced monthly payment if you don’t wait until you’re at full retirement age. Your monthly payment will depend a few things, including your income throughout your working years, how much you paid into the Social Security system and at what age you claim benefits. Benefits are adjusted yearly based on the cost of living.
Full retirement age depends on the year you were born:
- If you were born between 1943 and 1954, full retirement age is 66
- If you were born between 1955 and 1959, full retirement age is between 66 and 67, depending on your birth year
- If you were born after 1960, full retirement age is 67
The Social Security website provides a calculator to help individuals understand how much their benefit will be reduced if they collect early. For example, if you were born in 1960 and wanted to collect as soon as you hit age 62, you’d receive 70% of your full retirement age payout. But if you waited until age 64 you’d get 80% of the full benefit.
By delaying the receipt of your benefits past full retirement age, you’ll earn even more than the full benefit for every year after full retirement age and before you hit age 70, you’ll collect 8% more each year.
- If you’re full retirement age is 66, you can earn up to 132% of your full benefit by waiting until you’re 70
- If you’re full retirement age is 67, you can earn up to 124% of your full benefit by waiting until you’re 70
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Spouses And Social Security
You can claim Social Security benefits based on your spouse’s work record. If claiming spousal benefits provides more, claiming before your FRA on a spouse’s record means you’ll lose even more than claiming on your own recordthe benefit reduction for a spouse is up to 35% while the reduction for claiming your own benefit is up to 30%. For instance, if you’re the spouse of Colleen in the above example and you are the same age, you’d be eligible for only $650 a month at age 6235% less than the $1000 a month you would get at your FRA of 67.
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Your decision to take benefits early could outlive you. If you were to die before your spouse, they would be eligible to receive your monthly amount as a survivor benefitif it’s higher than their own amount. But if you take your benefits early, say at age 62 versus waiting until age 70, your spouse’s survivor Social Security benefit could be up to 30% less for the remainder of their lifetime.