How To Decide When To Claim Social Security
Think less about when you should claim Social Security and more about what you can do. Once understand what can do, in a position to decide what you should do, said Czarnowski.
One thing thats critical to learn is your full retirement age or FRA. Thats the age at which you’re entitled to your full retirement benefit amount. And your year of birth determines your FRA.
You can find your FRA by birth year on the Social Security website. But you dont have to claim at FRA. In fact, you can start collecting benefits as early as age 62 or as late as age 70. If, however, you start receiving benefits early, your benefits are reduced permanently a small percent for each month before your FRA. And if you delay your benefits until after FRA, you will be eligible for delayed retirement credits that would increase your monthly benefit.
But no matter when you claim, make it an informed decision, Czarnowski said.
Substantial Gainful Activity Sga
is an important concept to understand when pursuing Social Security Disability Insurance or Supplemental Security Income. The Social Security Administration defines it as the performance of significant mental and/or physical duties for profit.
SGA maximum amounts are set by the Social Security Administration and change regularly. If the SSA determines that your income is below the SGA maximum amount, you are financially eligible for disability payments. A higher SGA maximum amount is always set for blind individuals.
Your specific SGA income is calculated based on your gross earnings or your wages before taxes are taken out by the SSA. Impairment related work expenses are subtracted from the calculation, and you should not assume that you do not qualify for SSDI just because you earn a certain amount that exceeds the current SGA maximum.
It is important to note that SGA amounts change on a regular basis based on the national average wage index.
For more information on calculating your SGA income, you can contact your local Social Security field office to determine whether or not you meet the threshold with your current income and disability related expenses.
Next Steps To Consider
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Work Longer And Claim Social Security Later
Working longer is often the first and most important step to maximize your Social Security income in retirement. Firstly, the later you claim Social Security, the larger your monthly payment will be. Secondly, working longer allows you to potentially replace years with lower incomes with your current higher income, thereby increasing your Social Security calculated benefits.
In case you were wondering, Social Security benefits are calculated based on your top 35 years of working and paying into Social Security. For those who havent worked for that amount of time, when reaching retirement age, you will see zero Social Security credit for years not worked, which can reduce your eventual retirement income from Social Security.
WASHINGTON, DC OCTOBER 14: In this photo illustration, a Social Security card sits alongside checks from the U.S. Treasury on October 14, 2021 in Washington, DC. The Social Security Administration announced recipients will receive an annual cost of living adjustment of 5.9%, the largest increase since 1982. The larger increase is aimed at helping to offset rising inflation.
3. Increase Your Income While Working
Earning more will increase the amount of Social Security you will receive in retirement. Simply put, the more money you make, the more you pay into the Social Security system the more you pay in, the more you should receive in benefits. Increased income will only help up to a certain point.
4. Delay Claiming Social Security Benefits
Simplifying Your Social Security Taxes
During your working years, your employer probably withheld payroll taxes from your paycheck. If you make enough in retirement that you need to pay federal income tax, then you will also need to withhold taxes from your monthly income.
To withhold taxes from your Social Security benefits, you will need to fill out Form W-4V . The form only has only seven lines. You will need to enter your personal information and then choose how much to withhold from your benefits. The only withholding options are 7%, 10%, 12% or 22% of your monthly benefit. After you fill out the form, mail it to your closest Social Security Administration office or drop it off in person.
If you prefer to pay more exact withholding payments, you can choose to file estimated tax payments instead of having the SSA withhold taxes. Estimated payments are tax payments that you make each quarter on income that an employer is not required to withhold tax from. So if you ever earned income from self-employment, you may already be familiar with estimated payments.
In general, its easier for retirees to have the SSA withhold taxes. Estimated taxes are a bit more complicated and will simply require you to do more work throughout the year. However, you should make the decision based on your personal situation. At any time you can also switch strategies by asking the the SSA to stop withholding taxes.
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Where To Access A Free Break Even Calculator For Social Security That Solves These Problems
After several years of personal disdain for break even calculators, Ive moderated my thoughts. As long as an individual understands the limitations of a break even analysis that weve discussed above, I do believe there is a benefit in using a break even calculator as a part of your overall decision.
For that reason, weve recently had a one-of-a-kind break even Calculator for Social Security built for our community. There is no charge for you to use this calculator and simply requires you to set up a free account.
This break even Calculator for Social Security addresses the limitations that most other break even calculators available today pose. With our free tool, you can compare various filing ages down to the month. Weve also built in the COLA adjustments to make sure this calculator is as close to real life as possible.
To access this free calculator, . You may be prompted to set up an account, but you only need to provide your name and email address.
Hopefully, these thoughts on a break even Calculator for Social Security will help you build a more informed retirement plan. If you still have questions, you could leave a comment below, but what may be an even greater help is to join my.
Its very active and has some really smart people who love to answer any questions you may have about Social Security. From time to time Ill even drop in to add my thoughts, too.
Using Your Benefit Estimates
As your statement will show, your Social Security retirement benefits will vary depending on when you claim them before or after your full retirement age . The longer you wait to start receiving payments, the higher your benefit amount will be.
However, its not always better to wait until your full retirement age to claim your Social Security benefits. If you need your Social Security benefits for living expenses, or you have a health condition that makes it unlikely that you will live past age 75 or so, you may be better off collecting your benefits sooner rather than later. You can use a calculator at the Social Security website to see which retirement age makes the most financial sense for you .
For comprehensive practical information about how and when to claim Social Security benefits, see Social Security, Medicare & Government Pensions, by Joseph Matthews with Dorothy Matthews Berman .
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How Credits Are Earned
Since 1978, when you work and pay Social Security taxes, you earn up to a maximum of four credits per year.
The amount of earnings it takes to earn a credit may change each year. In 2021, you earn one Social Security or Medicare credit for every $1,470 in covered earnings each year. You must earn $5,880 to get the maximum four credits for the year.
During your lifetime, you might earn more credits than the minimum number you need to be eligible for benefits. These extra credits do not increase your benefit amount. The average of your earnings over your working years, not the total number of credits you earn, determines how much your monthly payment will be when you receive benefits.
Read our publication, “How You Earn Credits,” for more information.
I Cant Remember My Childs Social Anyway We Can Look It Up
If you had your child as a dependent on a previous tax return, you can find their SS number there.
Otherwise, you need to Contact the Social Security Administration at www.ssa.gov.
Social Security numbers are confidential information, so they are not available online, except from some fee-based services that I dont think that I would trust.
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Apply For A Social Security Number For Immigrants
Apply for an SSN with your immigrant visa
Your may request a Social Security card as part of your visa application. When filing Form DS-230 or Form DS-260 , there is option to request a Social Security number. If you have selected this option, you do not need to submit a special application or go to a Social Security office to get a card.
The Social Security Administration will assign you an SSN and issue you a card after you arrive in the United States. They will mail the card to the same U.S. mailing address where the Department of Homeland Security will send your green card. You should receive your Social Security card within 3 to 4 weeks after you arrive in the United States. If you do not receive the card by mail, contact the Social Security at 1-800-772-1213.
Apply for an SSN when filing Form I-765
Your may be able to apply for a Social Security Number at the same time you apply for employment authorization. If you need to file Form I-765 with the U.S. Citizenship and Immigration Services , you can request an SSN at the same time. Many adjustment of status applicants or DACA recipients use this method to request a Social Security Number.
How Your Ssdi Payments Are Calculated
The severity of your disability will not affect the amount of SSDI benefits you receive. The Social Security Administration will determine your payment based on your lifetime average earnings before you became disabled. Your benefit amount will be calculated using your covered earnings. These are your earnings at jobs where your employer took money out of your wages for Social Security or FICA.
Your SSDI monthly benefit will be based on your average covered earnings over a period of time, which is referred to as your average indexed monthly earnings . The SSA uses these amounts in a formula to determine your primary insurance amount . This is the basic amount used to establish your benefit.
SSDI payments range on average between $800 and $1,800 per month. The maximum benefit you could receive in 2020 is $3,011 per month. The SSA has an online benefits calculator that you can use to obtain an estimate of your monthly benefits.
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When To Apply For Benefits How Much Youll Get
AARP, Updated April 19, 2021
All the information presented is for educational and resource purposes only. It is not intended to provide specific or investment advice. We don’t guarantee the accuracy of the tool and suggest that you consult with your advisor regarding your individual situation.
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When Will You Collect
The SSA calculates your benefit amount at your full retirement age . This depends on the year you were born. FRA by birth year is:
- 19431954: age 66
- 1955: age 66 and two months
- 1956: age 66 and four months
- 1957: age 66 and six months
- 1958: age 66 and eight months
- 1959: age 66 and 10 months
- 1960 and later: age 67
The monthly amount you are eligible to receive at your FRA is considered your full benefit, but it is not your minimum or maximum benefit.
You have the option to file for early retirement as early as age 62. But, you may choose to delay taking your benefits until as late as age 70.
There are many reasons why you might choose to take early retirement or to delay it. That choice has a direct impact on the amount of your monthly payment. If you opt for early retirement, you are choosing a lower monthly payment for the rest of your life. By choosing to delay your benefit to any age between your FRA and age 70, you lock in an increase.
Your Monthly Benefits For Ssdi Is Not Based On Your Disability
The amount that you receive for Social Security disability is based on your earnings before you became disabled. Your payment is not based the severity of your disability, however your current income must be below a certain threshold to be eligible for SSDI. If you receive payments for your disability from other government sources, your monthly payment for SSD may be lowered.
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Your Monthly Benefits For Ssi
Calculating your monthly benefits for SSI is simple. If you meet the qualifications as described below, and your application for SSI is approved, you will receive benefits of $733 per month or $1,100 per month , minus a portion of your current income.
The federal amount for SSI is set in January of every year. You may receive an additional payment on top of your SSI benefits called a State Supplementary Payment. The availability of this program varies from one state to another.
Are Social Security Numbers Considered Public Records
As we stated, Social Security Numbers ARE NOT public records and should be kept secure and private. It is classified as personally identifiable information, such as drivers license numbers and passport ID numbers.
Conversely, public records are those considered to be publicly available and are generally provided at county courthouses, such as real property records, most criminal records, and bankruptcies, tax liens and judgments, respectively.
Social Security Cards: Documents Required To Obtain A Social Security Number And Card Or A Replacement Card
If an individual is unable to conduct business online, check the online field office locator for specific information about how to directly contact a local office in your area. The National 800 number is 1-800-772-1213 and .
The following information was obtained from the U.S. Social Security Administrations web page at: .
To Obtain a New Social Security Number and Card you will need to provide at least two documents to prove age, identity, and U.S. citizenship or current immigration status.
The new online service allows individuals to get replacement Social Security cards through the Social Security Administration website at: www.socialsecurity.gov/ssnumber
To Obtain a Replacement Card, if lost or stolen, you must prove your identity and U.S. citizenship.
To prove identity: Social Security must see:
- U.S. drivers license or
- Letter from doctor, with your name, address, social security number and doctors name, address, and signature
Social Security Calculation Step : Adjust All Earnings For Inflation
So lets jump in with calculating your AIME. To do this, youll need to get use a notepad or a tool like Excel/Google Sheets.
Youre going to need six individual columns with plenty of room underneath for your information. Set up your columns with the following headings: Year, Age, Actual Earnings, Indexing Factor, Indexed Earnings, Highest 35 Years.
The first two headings are the year and your age. Go all the way back to the first year you had earnings that were taxed for Social Security. You can find a complete record of this by going to your online SSA account and click the link that says view earnings record. If you dont have an online account, its very easy to set one up.
This may seem a little redundant to put the year and your age, but itll make another step a little easier.
Now you just need to copy down the information from the SS earnings history. Youll want to use the part that says your taxed Social Security earnings. Dont skip a year, even if there were no earnings. Just put a zero in.
Once you have all of your historical earnings recorded, its time to adjust them for inflation. The SSA uses an indexing factor to make sure your future benefit has kept up with inflation, but still based on your earnings.
Important note hereonly your earnings through age 59 are indexed. All earnings at age 60 and beyond are used in the calculation at face value with no inflation adjustment applied.
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