Thursday, June 16, 2022

How To Calculate Social Security Retirement Age

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Retirement Calculator: When A Husband Dies Does The Wife Get His Social Security

How Social Security Retirement Benefits Are Calculated [3 Easy Steps]

If a retiree dies, the surviving spouse receives the entire benefit of the worker.

Example: The pension benefit of a man is $1,200 a month. His wife has a spousal benefit of $600, as a 50%. The total social security family income is 1,800 dollars a month.

Please note that the price values in the examples given may not be exactly the same for you. As in the example above, you can find out your husband/wifes pension with the social security retirement calculator and calculate half of that wage for yourself.

Estimate Your Social Security Benefits With The Retirement Estimator

The Social Security Administration has a new tool to help people estimate how much they’ll receive in Social Security Benefits once they retire. The Retirement Estimator gives you estimates for early retirement, full retirement age, and age 70. The tool is okay, but obviously, the further from retirement you are, the less accurate the estimate will probably be. In order to use this tool, you’ll have to include your full name, date of birth, Social Security number, and mother’s maiden name. I was concerned about how identity thieves could exploit the system, since anyone could pretend to be you. Thankfully, SSA did put a protection in place: It only offers estimates of your retirement benefits and doesn’t show the earnings history that was used to calculate the benefits.I’m not counting on getting any Social Security benefits once I retire. It’s clear that the current system can’t be sustained as the Baby Boomers retire, and a revamp of it will likely leave people like me paying in more over my work life and receiving nothing once I retire. But if you’re nearing retirement age, it’s a nice tool to help you find out how much you’ll be getting on a monthly basis. Tracy L. Coenen, CPA, MBA, CFE performs fraud examinations and financial investigations for her company Sequence Inc. Forensic Accounting, and is the author of Essentials of Corporate Fraud.

Claiming Social Security At Age 66

If you were born between 1943 and 1954, your Full Retirement Age is 66. Claiming at your Full Retirement Age will entitle you to your full benefit amount, but you can still wait to claim. If you wait further, you will garner delayed retirement benefits, which will increase your monthly benefit when you do start collecting.

At Full Retirement Age you can work without any deductions from your benefit amount. However, you may still be taxed on your benefit if you have other substantial income such as wages, self-employment, interest, or dividends. If so, the Internal Revenue Service taxes your combined income which is your adjusted gross income, plus nontaxable interest, plus half of your Social Security benefits.

If you file a federal tax return as an individual and your combined income is between $25,000 and $34,000, you will have to pay income tax on up to half your benefits. If your income is more than $34,000, up to 85 percent of your benefits might be taxable.

If you are married and file a joint return, and your income together is between $32,000 and $44,000, you may have to pay income tax on up to half your benefits. If your income exceeds $44,000 you may have to pay income tax on up to 85 percent of your benefits.

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If You Were Born In 1955 Your Full Retirement Age Is 66 And 2 Months

You can start your Social Security retirement benefits as early as age 62, but the benefit amount you receive will be less than your full retirement benefit amount.

The chart below provides examples of the percentage of your full retirement benefit amount you and your spouse would receive from age 62 up to your full retirement age.

Beyond The Social Security Break

Free Social Security Calculator Tool: Estimate Your ...

As I mentioned before, calculating your Social Security break-even age can help you decide when to take your benefit, but I strongly suggest you consider other factors, including but not necessarily limited to the following:

Your health status. Make sure to consider the cost to your heath as well as your checkbook. You may want to retire early due to health concerns, or you may need to continue to be employed in order to keep your health insurance.

  • Your life expectancy. There are several online tools that can help you estimate your life expectancy, including the one at Livingto100.com and Northwestern Mutuals calculator.

  • Your income needs. Do you still have a mortgage? Dependents? A business loan? Add up your expenses and be pragmatic about how much youll actually need.

  • Any plans for part-time or full-time work. Working after retirement can bring in extra cash and keep you involved in your community. But if you work after retiring early, be aware that Social Security has caps on the amount you can earn without having your benefits reduced.

  • Your other retirement resources. If you have a portfolio of investments, a pension, a 401 or other resources to rely on in retirement, that could change the equation for you. If youre set up well financially, congratulations! You may be able to retire early. If you havent been so lucky, consider waiting so you can grow your Social Security benefits, and feel more comfortable about when you do retire.

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Myth #: You Must Claim Your Social Security Benefit At Age 62

Some people think you have to start claiming your Social Security benefits at age 62. Thats a myth: 62 is the earliest age you can claim your benefit, but its not the only age to do so.

Your base benefit is calculated according to your full retirement age, or FRA, and your FRA is determined by your date of birth. The Social Security Administration calculates your base Social Security benefit based on your average indexed monthly earnings during the 35 years in which you earned the most .

Tip: Youll find your FRA at Social Securitys website, SSA.gov, or on a paper statement mailed to you by the SSA. If you were born between 1955 and 1959, your FRA is 66 plus some months. If you were born in 1960 or later, your FRA is 67.

If you claim Social Security benefits any time before your FRA, you lock in a permanent reduction in monthly income. Claiming at 62 translates to a reduced monthly income of 25% to 30%, relative to your FRA monthly benefit. That means you may receive a lot less monthly retirement income, every year, for potentially several decades. A key consideration for when you claim Social Security benefits is maximizing your income for a retirement that could last longer than 30 years.

Wait until age 70 and lock in a bonus:

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

If you continue to work after reaching full retirement age, you may work and earn as much as youâd 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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Understanding The Basics Of My Choices

At this point, though, Im not making the decision of when to take my first Social Security check. Instead, Im just beginning to understand my choices.

Normal or full retirement age is determined by an individuals birth date. For those born in 1960 or later , full retirement age is 67 years. Further, I can claim benefits as early as 62 and delay claiming as late as 70. If I start early, then my monthly benefit is reduced if I start later, my benefit is increased compared to my regular benefit.

More specifically, here are the formulas for determining my monthly paycheck :

  • Take full retirement benefit at age 67
  • From 64 years to 66 years, 11 months, reduce the normal benefit by 5/9 of 1% each month I take an early retirement
  • From 62 years to 63 years, 11 months, further reduce the normal benefit by 5/12 of 1% each month I take a really early retirement in addition to the previous reductions
  • From 67 years, one month until age 70, add delayed retirement credits each month equal to 8% divided by 12

I can get an estimate of my monthly paycheck for retirement benefits by setting up and logging into an account with the Social Security Administration . Information provided includes an estimate of my monthly check at full retirement as well as amounts at age 62 and age 70. Ill note that the formulas provided above mesh with the dollar amount indicated in my SSA dashboard for the delayed retirement but dont match the early retirement number exactly .

How To Calculate The Social Security Breakeven Age

How to calculate your retirement age

Your Social Security breakeven age is the point in your life when the total of those lower benefits comes to equal the total of benefits that you would have received if you had waited to take your benefits at FRA, or even later.

For example, if you were born in 1960, your FRA is 67. If you choose to begin receiving Social Security income at age 62, which will be in 2022, then your FRA benefit will be reduced by 30%. Assuming that the full monthly benefit would be $1,000, you will be left with a monthly Social Security check of only $700.

If a co-worker with the same birth date and similar earnings history elects to receive their benefit at FRA five years later, then their benefit will be $1,000 each month. For the first five years, you received a total of $42,000 , while your co-worker received nothing, so you are ahead. Once your co-worker starts receiving benefits, however, they get $300 more each monthor $3,600 more each yearthan you do. So when will your co-worker catch up to you in total benefits?

Lets divide the amount by which you are ahead by the higher amount per year that your co-worker receives. The answer is when you are both 78 years and eight months, or 11.67 years after your FRA. After this point, your co-worker will earn more over their lifetime than you will.

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What Does Microsoft Excel Mean

Microsoft Excel is a software program produced by Microsoft that allows users to organize, format and calculate data with formulas using a spreadsheet system.This software is part of the Microsoft Office suite and is compatible with other applications in the Office suite. Like other Microsoft Office products, Microsoft Excel can now be purchased through the cloud on a subscription basis through Office 365.

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Why It May Be Better To Claim Early

While delaying benefits may be a good decision for some people, there are plenty of reasons to consider claiming earlier.

For example, it will give you more time to enjoy your retirement. You don’t necessarily have to retire and claim benefits at the same time, but they often go hand-in-hand. Not everyone wants to wait until their 70s to retire, and by claiming earlier, you can get a jump-start on retirement when you’re still young and healthy.

Claiming benefits earlier could be especially smart if you’re battling health issues or have reason to believe you’ll live a shorter-than-average lifespan. Again, you should theoretically receive the same amount over a lifetime regardless of when you claim. However, these calculations assume an average lifespan. If you’re facing health problems, you could potentially collect more in total if you claim earlier.

Finally, life is unpredictable, and you never know what curveballs it could throw at you. If you plan on delaying benefits but then start experiencing health problems, for example, you may regret waiting so long to claim.

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Do Survivor Benefits Increase After Full Retirement Age

If you are the surviving spouse who is claiming benefits based on your deceased partner’s work record, there is no benefit to waiting until after FRA to claim your benefits. You do not earn delayed retirement credits, so your benefit will not increase.

However, if you are the higher-earning spouse, delaying your claim for benefits until after FRA can result in your widow receiving more monthly income, as your widowed partner will receive the higher of the two monthly benefits you were each receiving.

How To Calculate Your Social Security Break

The Social Security Administration Made a Mistake

Deciding when to take Social Security retirement benefits is important because it can directly affect your benefit amount. While you can technically start taking benefits as early as 62, youd receive them at a reduced amount. On the other hand, you could delay taking benefits up to age 70. Calculating your Social Security break-even age can help you decide when the best time is to begin taking benefits. You can do that using a Social Security break-even calculator. Additionally, it may behoove you to consult with a financial advisor about when its best for your particular situation to begin receiving Social Security.

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You Can Undo A Social Security Benefits Claiming Decision

There aren’t many times in life you can take a mulligan. But Social Security offers you the chance for a do-over. Let’s say you claimed your benefit, but regretted the decision and wished you had waited. Within the first 12 months of claiming Social Security benefits, you can withdraw the application. You will need to pay back all the benefits you received, including any spousal benefits based on your record. But you can later restart your Social Security benefits at the higher amount youll earn by waiting.

Early claimers have another opportunity for a do-over: They can choose to suspend their Social Security benefit at full retirement age. Say you took your benefit at age 62. Once you turn full retirement age, you can suspend your benefit. You don’t have to pay back what you have received, and your benefit will earn delayed retirement credits of 8% a year. Wait to restart your benefit at age 70, and your monthly payment will get up to a 32% boost — which could erase much of the reduction from claiming early.

Do You Expect To Have Additional Sources Of Retirement Income Beyond Social Security

Continue saving in the coming years.

Social Security won’t replace all of your pre-retirement income. On average, Social Security replaces 40 percent of a worker’s income. That means your retirement savings, pension, 401, or Individual Retirement Account will need to fill the gap. Claiming at your full Social Security benefit age or later can minimize this gap and maximize your monthly benefit. If you claim before your full retirement age, your monthly benefit could be reduced by as much as 30 percent.Learn more about saving for retirement.

You have an opportunity to continue growing your money.

If you can, get the highest monthly Social Security benefit possible by claiming at your full Social Security benefit age or later. If you claim before your full retirement age, your monthly benefit could be permanently reduced by as much as 30 percent. Also, take advantage of catch-up contributions to your 401 or Individual Retirement Account . Lastly, avoid losing your retirement savings to unnecessary tax penalties. If you withdraw your 401 or IRA savings before age 59½, you will likely face an early withdrawal penalty.Learn more about how retirement savings grow.

It’s a perfect time to start saving.

It’s never too late to start saving!

There are many ways to plan for a secure retirement outside of Social Security.

It’s never too late to start saving!

A type of retirement savings account offered by employers to help their employees save for retirement.

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Tax Considerations For Social Security Benefits

How do these tax considerations affect when you should apply for Social Security benefits? At todays , they may not have much of an impact on most people. Still, tax rates and income thresholds can change, so its worth remembering that you will lose less of your Social Security to taxes if you are in a lower marginal tax bracket when you begin to collect.

You should also note that if you decide to return to work, even part-time, and arent yet at your FRA, your Social Security benefits may be temporarily reduced. The reduction is $1 for every $2 of earned income over $18,960 in 2021 . During the year when you reach your FRA, your benefits will be reduced by $1 for every $3 in income over $50,520 in 2021 until the month when you become fully eligible. That money isnt lost, however. The SSA will credit it to your record when you reach your FRA, resulting in a higher benefit.

How Much Social Security Will I Get In Retirement

Social Security Retirement Calculator

The amount of your monthly Social Security retirement benefit depends on multiple factors, including how much you earn over your working life, how old you are when you retire and allowances for inflation. Understanding how the payment is calculated can help you estimate what to expect and better position yourself to plan for retirement. Here’s how it works.

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Calculate My Social Security Income

These days thereâs a lot of doom and gloom about Social Securityâs solvency – or lack thereof. And regardless of whether you think Social Securityâs future is secure, the fact remains that you shouldnât plan on living exclusively off your Social Security benefits. After all, Social Security wasnât designed to make up a retireeâs entire income.

Still, many people do find themselves in the position of having to live off their Social Security checks. And even if you have other income sources in retirement, Social Security can make up a significant part of your retirement income plan. That’s why itâs important to know all the rules surrounding eligibility, benefit amounts, taxation and more.

Do you need help managing your retirement savings? To find a financial advisor near you, try our free online matching tool.

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