What To Consider Before Filing For Social Security
A larger benefit check sounds great, but there are tradeoffs, and soon-to-retire folks should consider multiple issues before they decide one way or the other on when to file. If you really want to consider all the avenues, then youll have to think about your finances and longevity two issues that people have a hard time grappling with.
But heres the key trade-off: you can file early and take a reduced benefit, expecting that a shorter life span will mean you receive more now, or you could file at full retirement age or later and claim a bigger check, and eventually live long enough to claim more than the first approach.
Social Security is like longevity insurance, says Brent Neiser, a Certified Financial Planner and former chair of the Consumer Advisory Board at the Consumer Financial Protection Bureau. Its a stream of payments that will not stop throughout your life, so delaying your benefits to keep those payments as large as possible forms a helpful base to your retirement plan.
Neiser urges those who have not saved enough for retirement to use whatever means possible to postpone their Social Security benefits until after their full retirement age to help boost their future income.
You can use personal savings to help bridge the gap, but ideally you should plan to work a little longer , Neiser says.
When Does Medicare Not Automatically Start
Medicare will NOT automatically start when you turn 65 if youre not receiving Social Security Benefits or Railroad Retirement Benefits for at least 4 months prior to your 65th birthday. Youll need to apply for Medicare coverage.
Theres no such thing as a Medicare office enrollment in the program is handled by the Social Security Administration . If you have to enroll in Medicare Part A and/or B on your own, you can visit your local Social Security office.
You can also online by following the instructions at the Social Security Administration Medicare Benefits web page. In most cases, signing up online will take ten minutes.
This Change To Social Security Will Affect Benefits For Retirees Turning 66
To understand the rule change that will affect you if you’re turning 66 next year, you need to know a few basic facts about how Social Security benefits work.
- You receive your standard benefit if you retire at exactly full retirement age . Your standard benefit is your primary insurance amount calculated based on how much you earned during your career.
- You are hit with early filing penalties for any month you get a Social Security check prior to FRA. So if you get benefits one month early, you face one month’s worth of early filing penalties. These reduce your monthly check amount, leaving you with smaller benefits each month for the rest of your life.
- You earn delayed retirement credits for any month you put off the start of your Social Security benefits. These credits raise your payment, giving you more money each month for the rest of your life.
This all means your FRA plays a crucial role in the amount of money Social Security provides to you.
Since FRA is so important, everyone turning 66 this year needs to know their FRA is changing. It’s also changing for people who won’t hit this milestone until future years. FRA is going to be a little bit later for anyone who turns 66 in 2022 or in subsequent years than it was for retirees who have already reached this key birthday.
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Can You Still Work While Receiving Social Security
You can continue to work while you receive Social Security benefits. But there is a limit to how much you can earn and still receive full benefits. The earning limit may be adjusted each year.
If you earn above the limit, Social Security will deduct a certain amount of your benefits each year.
Social Security Benefits, Earning Limits and Penalties
|SSA deducts $1 from your benefits for every $3 you earn above the limit|
A Guide On Taking Social Security
The decision of when to take Social Security is highly dependent on your circumstances. You can start taking it as early as age 62 , wait until you’ve reached full retirement age or even until age 70. While there’s no “correct” claiming age for everybody, the rule of thumb is that if you can afford to wait, delaying Social Security can pay off over a long retirement. Here are some of the rules and guidelines.
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When Should You Start Collecting Social Security Benefits
To determine when you should start taking your benefits, its important to understand how much your check is affected by when you claim your benefit. As mentioned before, you can claim your benefit as early as age 62, but reaching full retirement age can secure your full benefit.
So when exactly is full retirement age? That depends on when you were born.
|Year of birth|
|65 + 2 months for each year past 1937|
|66 + 2 months for each year past 1954|
|1960 and later||67|
While the full retirement age used to be 65, changes to the program have increased that age. For example, those born in 1955 now have to wait an extra two months beyond age 66 to claim their full benefit. Someone born in 1959, for example, would have to wait until age 66 and 10 months to get the full benefit. Anyone born in 1960 or later, receives their full benefit at 67.
But some retirees choose to wait even longer. You may wait until as late as age 70 to claim your benefit, but then you must take it. Youll receive a bigger check for doing so.
So what is the upside to delaying your Social Security benefit after age 62? Your check wont get hit by a serious benefit reduction. Heres how much a $1,000 monthly check will become if you claim your benefit as soon as youre eligible at age 62.
|Year of birth||If you file at 62, benefit reduced by:||A $1,000 check becomes|
What Is The Difference Between Retiring At 65 And 66
You might assume that 65 is your full retirement age for Social Security purposes because that’s when you’re first eligible for healthcare coverage under Medicare. But for people born between 1943 and 1954, full retirement age is 66. For those born between 1955 and 1959, it’s 66 and a certain number of months.
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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.
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.
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How To Get A Social Security Card
Ssi Benefits Payable At Age 65
You must be blind, disabled or 65 years of age with little or no income and have resources with a total value that does not exceed $2,000 to qualify for SSI. Unlike SSDI, which is based you an applicants work history, you may qualify for SSI without ever having worked.
If you qualify for an SSI benefit, the maximum monthly payment that you can receive in 2022 is $841 or $1,261 for an eligible couple. The amount that you actually receive each month may be less than the maximum if you receive income from other sources.
For example, if a relative gives you $300 worth of food, you must report it to SSI. The monthly payment of $841 that you would normally receive from SSI will be reduced by the money given to you by the relative.
There are, however, exclusions to the income and resource rules that may in certain situations. For instance, food and shelter provided to you by a charitable organization may not count toward reducing your monthly SSI benefit. Other exclusions also may apply depending on the particular facts and circumstances related to your claim.
Learn more from a disability lawyer
The rules and regulations governing the SSA benefit programs available to you at age 65 are complicated, but help is available from an SSD lawyer and disability advocates at London Eligibility. Contact them today for a free consultation and claim evaluation.
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How Do Benefits Work And How Can I Qualify
While you work, you pay Social Security taxes. This tax money goes into a trust fund that pays benefits to:
Those who are currently retired
To people with disabilities
To the surviving spouses and children of workers who have died
Each year you work, youll get credits to help you become eligible for benefits when its time for you to retire. Find all the benefits Social Security Administration offers.
There are four main types of benefits that the SSA offers:
Learn about earning limits if you plan to work while receiving Social Security benefits
If You Are Still Working And Receiving Old Age Security Payments
If you are still working and your income is higher than $79,054 , you will have to repay part of your Old Age Security pension payment. Delaying your first payment can let you keep more of your pension.
If you are planning on receiving the Guaranteed Income Supplement and your income is less than what you reported on your tax form last year, contact us.
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Early Benefits Can Still Pay Off
However, taking early benefits can still pay off despite the reduced monthly check. But youll want to be sure you budget for a reduced benefit.
No one can predict how long youll live, but if youre facing a potentially significant reduction in life expectancy and are short of income, taking Social Security early may be appropriate, Neiser says.
Married women are also good candidates for claiming early benefits because they are likely to outlive their husbands. Those widows then become eligible to receive the greater of either their benefit or their late husbands benefit.
However, this scenario works only if the husband does not claim his benefits early. By not claiming early benefits, the husband effectively increases the monthly benefit his wife eventually receives. So youll want to calculate how filing early will affect your spousal benefit here.
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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A Quick Note About Life Expectancy: According To The Social Security Administration Average Life Expectancy For A 65
Your spouse: If you are married, you can explore additional strategies to maximize the benefits you receive collectively. Start by taking your spouse’s age, health, and benefits into account, particularly if you’re the higher-earning spouse. The amount of survivor benefits for a lower-earning spouse could depend on the deceased, higher-earning spouse’s benefitthe bigger the higher-earning spouse’s benefit, the bigger the benefit for the surviving spouse.
Whether you’re still working. Earning a wage can reduce your benefit temporarily if you take Social Security early. If you’re still working and you haven’t reached your full retirement age, $1 in benefits will be deducted for every $2 you earn above the annual limit .
In the year you reach your full retirement age, the reduction falls to $1 in benefits deducted for every $3 you earn above a higher limit . However, starting the month you hit your full retirement age, your benefits are no longer reduced no matter how much you earn.
Again, any reduction in benefits due to the earnings test is only temporary. You receive the money back in the form of a recalculated higher benefit beginning at full retirement age, so don’t use the reduction as the sole reason to cut back on working or worrying about earning too much.
Eligibility Requirements And When To Place Your Claim
If in your lifetime you have worked for ten years, you are eligible to place a claim to begin receiving Social Security benefits as early as age 62 and as late as age 70. Deciding when is best for you is a personal decision.
Social Security benefits are generally lower the earlier you place your claim. The initial payment will set the standard for ongoing payments, though you typically will receive cost of living increases from year-to-year. Social Security benefits continue until death.
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What Is A Social Security Card
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.
To Wait Or Not To Wait
- Consider taking benefits earlier if
- Consider waiting to take benefits if
- Consider taking benefits earlier if You are no longer working and can’t make ends meet without your benefits.
- Consider waiting to take benefits if You are still working and make enough to impact the taxability of your benefits.
- Consider taking benefits earlier if You are in poor health and don’t expect the surviving member of the household to make it to average life expectancy.
- Consider waiting to take benefits if You are in good health and expect to exceed average life expectancy.
- Consider taking benefits earlier if You are the lower-earning spouse and your higher-earning spouse can wait to file for a higher benefit.
- Consider waiting to take benefits if You are the higher-earning spouse and want to be sure your surviving spouse receives the highest possible benefit.
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What If I Change My Mind
If you receive Social Security benefits at a reduced rate, but then change your mind, you have the option of withdrawing your application and paying back to the government what you’ve already received . Then, you could restart benefits at a later date to take advantage of a higher payout. But you are limited to one withdrawal per lifetime.
For example, let’s say you elected to receive early benefits at age 62, but then decided to go back to work at age 63. You could withdraw your Social Security application within the first 12 months of receiving benefits, pay back the years’ worth of benefits you received, go back to work, and then wait until a later age to restart your benefit checks at a higher level.
For important details about repaying benefits please read the SSA publication If You Change Your Mind.
A Closer Look At Your Canada Pension Plan Benefits
Another major benefit that kicks in is the Canada Pension Plan . But unlike Old Age Security or Guaranteed Income Supplement, CPP is a program that you contribute to throughout your working years.
You can start claiming reduced CPP benefits from the time you turn 60, or wait until your 65th birthday for the full CPP pension. Seniors might also decide to delay when they start receiving their CPP pension by up to five years so they receive a higher monthly benefit.
To qualify for CPP you need:
- To be at least 60 years of age
- Have made at least one valid contribution to the CPP during your working years
Currently, the absolute maximum monthly amount of CPP you could receive at age 65 is $1,154.58. Though, the average across the board is about $679.16 per month.
Keep in mind the amount you receive depends on how much you and your employer contributed, the number of years you contributed and at what age you decided to start collecting CPP benefits.
All in all, there are plenty of federal benefits available to seniors 65 older that will help keep you financially stable and secure well into your later years. To learn more about what benefits you might be eligible for, check out the Canadian Governments benefits finder page here.
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