Understand How The Government Calculates Social Security
Many Americans assume that Social Security benefit amounts are based on your entire working career. In reality, your payments are based on your earnings from the 35 highest income years. If you have not worked for 35 years, every year you didnt work will reduce your benefits. Want to avoid those zeros? Think about working a few extra years to raise your lifetime income average. In addition to helping fill your savings account, this should boost your Social Security benefit.
Land A Job Suspend Your Benefits
Let’s say you file for Social Security and start receiving benefitsand then are you are hired for a new job a few months later. What should you do? If you have reached full retirement age, you can actually suspend your benefits and claim them later . This will allow you to earn a higher benefit when you do start receiving payments again.
Apply For Survivors Benefits
You should notify us immediately when a person dies. However, you cannot report a death or apply for survivors benefits online.
In most cases, the funeral home will report the persons death to us. You should give the funeral home the deceased persons Social Security number if you want them to make the report.
If you need to report a death or apply for benefits, call 1-800-772-1213 . You can speak to a Social Security representative between 8:00 a.m. 7:00 p.m. Monday through Friday. Although our offices are closed to the public, employees from those offices are assisting people by telephone. You can find the phone number for your local office by using our Social Security Office Locator and looking under Social Security Office Information. The toll-free Office number is your local office.
If you are not getting benefits
If you are not getting benefits, you should apply for survivors benefits promptly because, in some cases, benefits may not be retroactive.
If you are getting benefits
If you are getting benefits on your spouse’s or parent’s record:
- You generally will not need to file an application for survivors benefits.
- We’ll automatically change any monthly benefits you receive to survivors benefits after we receive the report of death.
- We may be able to pay the automatically.
If you are getting retirement or disability benefits on your own record:
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Whats Your Social Security Break
If youre looking to maximize your total lifetime Social Security payout, youll want to conduct a break-even analysis to determine when you should start drawing your benefits.
Your break-even age occurs when the total value of higher benefits starts to exceed the total value of lower benefits .
For example, if you are eligible to collect a reduced $900 benefit at age 62 plus 1 month, and your benefit would increase to $1,251 at age 65 and 10 months, your estimated break-even age is 75 years and 5 months.
If you expect to live beyond that age, it could make financial sense to delay drawing benefits. The Social Security Administrations life expectancy calculator can help you decide.
When it comes to calculating a start date for Social Security benefits, however, theres not an age thats appropriate for everyone. Consider your own financial needs, health and other retirement plans before making the call. If you cant reasonably afford to live without taking benefits, it may make little sense to delay taking your benefit.
Unemployment Benefit In France
In January 2015, employees paid 2.4% of monthly salary to protect against unemployment. Employers contributed 4% of salaries up to a ceiling of 12,680 month.
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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, then your Social Security benefits may be temporarily reduced. The reduction is $1 for every $2 of earned income over $18,960 . During the year when you reach your FRA, your benefits will be reduced by $1 for every $3 in income over $50,520 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.
As They Say Nothing Worth Having Comes Easily And That Goes Double When It Comes To Social Security Maximizing Your Social Security Benefit Takes Careful Planning
Social Security is probably the most popular federal program there is, yet most people know very little about it.
Theres a reason for that: Complex rules and benefit formulas make it extremely difficult to understand exactly how this important income source actually works.
The Social Security Handbook, the document the Social Security Administration produces and updates each year, contains nearly 3,000 rules that describe all the provisions for drawing benefits.
Then theres the Program Operations Manual System, which contains even more rules thousands of them to explain the rules in the handbook. At last count, there were 567 different sets of calculations to determine how and when to apply for benefits. And for married couples who want to make the most of what they have coming, there are 81 age combinations to consider.
You would think with all those moving parts, you could go down to your local SSA office and ask for a little guidance. Unfortunately, SSA employees can help you with filing claims but they are not able to offer claiming advice.
So, how should someone go about planning for their Social Security benefits?
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Collect Survivors Payments If Available
Survivors payments are Social Security benefits designed to help replace lost retirement income if your spouse passes away. As a widow or widower, you can elect to receive ongoing benefits beginning at age 60. However, claiming survivors benefits before you reach full retirement age will reduce the benefit amount, so you may want to wait it out. At age 62, you can switch to claim benefits based on their own earnings record, which could mean a higher payout.
Maximizing Your Social Security Retirement Benefits Can Help You Achieve Other Financial Goals
If youve built a healthy nest egg for your retirement, you may not be relying on Social Security benefits to cover expenses when you stop working. Still, there are important considerations to keep in mind around when and how to claim Social Security that can help you make the most of your benefits for retirement and other financial goals.
Many people have both practical and emotional considerations regarding when to claim Social Security, a system many of us pay into our entire working lives. Still, you should consider your complete financial picture in retirement before making such a big decision, however.
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You Can Undo A Social Security 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. Say you claimed your benefit, but soon thereafter wish you had waited to take it. 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.
What Documents Do You Need To Apply For Retirement Benefits
We request different documents depending on your circumstances. You can help by being ready to provide the information and documents listed below. You can also use our Checklist For The Online Medicare, Retirement, And Spouses Application to help you gather the information you need to apply.
Documents we may ask for include:
- Your Social Security card or a record of your number.
- Your original birth certificate, a copy certified by the issuing agency, or other proof of your age.We must see the original document, or copies certified by the agency that issued them. We cannot accept photocopies or notarized copies.
- If you were not born in the U.S., proof of U.S. citizenship or lawful alien status. We must see the original document, or copies certified by the agency that issued them. We cannot accept documents if they have expired. We cannot accept photocopies or notarized copies.
- A copy of your U.S. military service paper if you served before 1968. A photocopy is acceptable.
- A copy of your W-2 form and/or self-employment tax return for last year. A photocopy is acceptable.
We will return all documents and photocopies unless specifically told otherwise.
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When A Spouse Dies
When one spouse dies, the surviving spouse is entitled to receive the higher of their own benefit or their deceased spouses benefit. Thats why financial planners often advise the higher-earning spouse to delay claiming. If the higher-earning spouse dies first, then the surviving, lower-earning spouse will receive a larger Social Security check for life.
When the surviving spouse hasnt reached their FRA, they will be entitled to prorated amounts starting at age 60. Once at their FRA, the surviving spouse is entitled to 100% of the deceased spouses benefit or their own benefit, whichever is higher.
An Advanced Claiming Strategy
If you or your spouse reached age 62 by the end of 2015, you qualify for a Social Security claiming strategy called restricted application.
Here’s how it works: The younger spouse claims Social Security benefits based on his or her own earnings record.
When the older spouse reaches full retirement age , he or she files a restricted application for spousal benefits only. At that point, both spouses are claiming benefits based on the younger spouse’s earnings record.
Then, at age 70, the older spouse claims benefits based on his or her own earnings record, which have increased to 132% of what that spouse would’ve been eligible for at FRA.
See how it works:Restricted application
What’s My Full Retirement Age
Full retirement age, or FRA, is when you’re entitled to your full Social Security benefit based on your earnings history. That age falls between 66 and 67, depending on when you were born.
For each month you claim benefits before FRA, they get reduced. And if you sign up at the earliest possible age of 62, you’ll face a 25% to 30% reduction in your Social Security income, depending on your FRA.
If you don’t want to see your benefits get cut in any way, then you’ll need to wait until FRA to file for them. At the same time, you may decide to delay your filing past FRA.
For each month you hold off, your benefits increase. And if you wait until age 70, you’ll score a 24% to 32% boost that will remain in place for the rest of your life.
Can American Expatriate Receive Social Security Payments While Residing Abroad
In most cases, a qualifying US citizen may receive social security benefits when residing in a foreign country with a few exceptions.
There is legislation in place that prohibits the SSA from sending Social Security payments to Cuba and North Korea. Once the US citizen leaves these countries, the SSA will remit all withheld payments. Non-US citizens who qualify for social security benefits will not be able to receive the benefits accrued while inside of the restricted country.
Other countries in which the SSA may not send payments include: Azerbaijan
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How Benefits Are Calculated
Social Security benefits are calculated based on your 35 highest-earning working years. Therefore, if you keep working and earn a higher salary in your 60s than you did earlier in your career, you could boost your Social Security payments even more.
If you don’t really need the money as soon as you reach full retirement age and are in good health, it’s probably wise to wait until you turn 70 to apply. “When you think of Social Security the right way, as insurance against outliving your money, then it makes sense to wait until age 70 for the highest payout available,” says Robert R. Schulz, CFP®, president of Schulz Wealth in Mansfield, TX.
What Is A Social Security Agreement
A social security agreement is an international agreement between Canada and another country that is designed to coordinate the pension programs of the two countries for people who have lived or worked in both countries.
Canada has signed social security agreements with a number of other countries that offer comparable pension programs.
The requirements under the social security agreements vary from agreement to agreement. It is important to check the details of the agreement that relates to you.
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Consider Working In Retirement
Theres no rule that says you cant work and claim Social Security at the same time. There are, however, restrictions on the amount of benefits you can receive if you continue working before reaching full retirement age.
Specifically, the SSA deducts $1 from your benefit payments for every $2 you earn above the annual earnings limit allowed if youre under full retirement age. The limit for 2019 is $17,640. Once you reach full retirement age, the deduction goes to $1 for every $3 you earn over $46,920.
So if youre plan to claim benefits while working, be mindful of earnings to avoid reducing your retirement income. The good news is that once you reach full retirement age, you can earn as much as you want without facing a decrease in your monthly payment. Plus, your benefits will be recalculated to exclude the months when your benefits were reduced or withheld because you earned too much.
Social Security Benefits: How To Get Your Checks Faster
A new executive order will help
President Joe Biden has signed an executive order aimed at making it easier for Americans to claim and receive the various benefits that they’re entitled to. As part of this, the president has ordered the Social Security Administration to simplify the process and acquisition of benefits.
“Today, I’m signing an executive order to ensure that the federal government puts you, the American people, at the front of the line and first in everything we do,” Biden said as he signed the order on Monday.
“I’m directing 17 agencies here to focus on more than 30 key areas to make it easier to apply for services and benefits that they’re entitled to and they’ve paid for and is theirs, their government.
“The bottom line is we’re going to make the government work more effectively for the American citizens so it’s not as confusing and it’s straightforward. I believe this will go a long way to restoring faith in government.”
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Social Security Benefits If Youre Married
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.
To Postpone Or Not To Postpone
You can start receiving Social Security at 62, but your monthly payments will be larger for every month you delay claiming them up to age 70. Once you turn 70, there is no benefit to holding off any longer.
For example, if you were born in 1960 and start your retirement benefits at age 62 while your full retirement age is 67, your monthly benefit is reduced by a whopping 30%. However, if you wait until you turn 70 to sign up, you could increase your benefit by 24%.
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