Thursday, June 16, 2022

How To Get More Social Security

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How To Get The Maximum Social Security Benefit

How to Get More Social Security When You Retire

The maximum Social Security benefit in 2020 is $3,790 per month or $45,480 for the year. Most people do not get that much, though. In order to receive the maximum amount, you would have had to postpone receiving benefits until age 70. You also would need to have earned the maximum taxable amount for at least 35 years. For people who start receiving benefits at full retirement age , the maximum amount is $3,011. That said, the average Social Security check in January 2020 was $1,503. Read on for strategies for maximizing your payments. But to make sure you have enough in retirement to maintain your current lifestyle, youre best off talking to;a financial advisor.

Carefully Assess Your Prescription Drug Needs

For many Medicare beneficiaries, prescription medications are their number one healthcare costs. And the prescription drug plan you choose plays a dramatic role in determining your overall costs. Choose the wrong plan and your costs can skyrocket.

Medicare Part D is the most difficult part of Medicare for most people to wrap their heads around. The simple reason has to do with the four phases of Part D coverage:

  • Initial DeductibleA deductible is an amount a beneficiary must pay for their health care expenses before the health insurance policy begins to pay its share….:;In this phase, you pay 100% of all costs until retail spending reaches the annual standard deductible set by your plan.
  • Initial Coverage LimitOnce you have met your yearly deductible, you will pay a copayment or coinsurance for each covered drug until you reach the initial coverage limit. You will then enter your plans coverage gap :;In this phase, you and your plan share the cost at the pharmacy until retail spending reaches the coverage limit for the year.
  • Coverage GapA period of time in which you pay higher cost-sharing for prescription drugs until you spend enough to qualify for catastrophic coverage…. : In this phase, you pay 25% of the retail costs of all generic and brand name medications.
  • Catastrophic Coverage:;In this phase, you pay up to $3.60 for all generic/preferred multi-source medications and up to $8.95 for all others.
  • Don’t Earn Too Much If You Retire Early

    Once you retire and start taking Social Security, itâs crucial to keep a close eye on any extra money you make, because that can reduce your benefits.

    If you’re younger than your full retirement age, Social Security in 2019 cuts $1 from your benefits for every $2 you earn over $17,640.

    In the year that you reach full retirement age, your benefits will shrink by $1 for every $3 earned above $46,920 â until you hit your birthday. After that, you can earn as much as you want, with no impact on your benefits.

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    You May Qualify For Legal Assistance

    Thinking about applying for disability benefits? Having an experienced Social Security attorney;file your claim makes you 2x more likely to get benefits approved on your first try. Since these lawyers always work on contingency, you can get a free, no-obligation consultation and get advice for your specific situation. This consultation starts with a phone call, and you dont have to move forward with your claim. If you dont get a cash settlement, you owe the lawyer $0. And if you do win, youll only pay a small, one-time fee.

    Ready to see if you may qualify? Click the button below to start your free online benefits evaluation now!

    Beware The Social Security Earnings Test

    Social Security Cheat Sheet

    Bringing in too much money in earned income can cost you if you continue to work after claiming Social Security benefits early. With what is commonly known as the Social Security earnings test, you will forfeit $1 in benefits for every $2 you make over the earnings limit, which in 2021 is $18,960. Once you are past full retirement age, the earnings test disappears, and you can make as much money as you want with no impact on benefits.

    Any Social Security benefits forfeited to the earnings test are not lost forever. At your full retirement age, the Social Security Administration will recalculate your benefits to take into account benefits lost to the test. For example, if you claim benefits at 62 and over the next four years lose one full years worth of benefits to the earnings test, at a full retirement age of 66 your benefits will be recomputed — and increased — as if you had taken benefits three years early, instead of four. That basically means the lifetime reduction in benefits would be 20% rather than 25%.

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    Get Enrolled In Medicare On

    One of the biggest mistakes people make is not enrolling in Medicare on time. This often happens because they are still working and have coverage through an employer and dont feel they need Medicare yet. However, not enrolling on time, or not checking with Medicare to make sure the coverage they have is credible, can be very costly.

    Theres a Part A late enrollment penalty, but it only applies to people who dont qualify for premium-free Part A coverage. If you have to buy Part A, and you dont buy it when youre first eligible, Medicare can raise your monthly premium by 10%. Youll be required to pay the penalty for twice the number of years you could have had Part A, but didnt enroll.

    Theres also a Part B late enrollment penalty. This penalty applies to everyone eligible for Medicare who does not signup when they first qualify. For this late enrollment, Medicare can hike your premium up to 10% of the standard premium for each full 12-month period that you could have had Part B but didnt sign up for it.

    How Your Social Security Benefits Are Earned

    To be eligible for Social Security benefits in retirement, you must earn at least 40 “credits” throughout your career. You can earn as many as four credits a year, so it takes 10 years of work to qualify for Social Security.

    In 2021, you must earn $1,470 to get one Social Security work credit and $5,880 to get the maximum four credits for the year.

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    Theres An Annual Social Security Cost

    One of the most attractive features of Social Security benefits is that every year the government adjusts the benefit for inflation. Known as a cost-of-living adjustment, or COLA, this inflation protection can help you keep up with rising living expenses during retirement. The Social Security COLA is quite valuable; its the equivalent of buying inflation protection on a private annuity, which can cost a pretty penny.

    Because the COLA is calculated based on changes in a federal consumer price index, the size of the COLA depends largely on broad inflation levels determined by the government. In 2021, Social Security beneficiaries will see a 1.3% COLA in their monthly Social Security benefits.;

    The Kiplinger Letter forecast in March that the 2022 COLA would be 3%, which would be the largest increase since 2012 when Social Security benefits ticked up 3.6%.;;

    Heres what COLAs have been in other recent years:

    • 2009: 5.8%
    • 2021: 1.3%

    The Problem: The Economic Toll From The Pandemic Will Very Likely Affect Social Security Benefits

    Get more from Social Security

    The initial retirement benefits that Social Security beneficiaries receive in the first year of retirement are determined by a formula that depends, in part, on the growth of average wages in the economy. Due to the economic fallout from the COVID-19 pandemic, the key measure of average wagesthe average wage index is very likely to decline in 2020. As a result, the initial retirement benefits for those who are first eligible to receive benefits in 2022when they reach the age of 62would be significantly less than what was anticipated only months ago, before the pandemic began to exact its economic toll. The effect is very likely to be so significant that workers turning 62 in 2022 would receive initial retirement benefits that are less than those of workers who were born a year earlier and who had essentially the same earnings history. This incongruity is what Social Security experts call a benefit notch. Such a notch would be unfair to the beneficiaries who turn 60 in 2020 and first become eligible to retire in 2022 because benefits are normally expected to grow for each successive cohort of retirees. Moreover, the benefit reduction and notch would have long-lasting consequences, as they not only would affect benefits in the first year of ones retirement but also lower them for every year going forward, as annual benefits are determined by adjusting the initial level for inflation.

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    Minimize Your Social Security Taxes

    If you thought your days of paying taxes stop with Social Security, guess again. Your Social Security benefits are taxable when your adjusted gross income, plus your nontaxable interest, plus your Social Security benefits exceed $25,000 as an individual or $32,000 as a married couple. When this happens, youll owe income tax on half of your Social Security income . However, youll never be required to pay tax on more than 85% of your SSI, no matter how much you earn. For high-income earners, this is one incentive to take SSI benefits as early as possible, because the lower SSI payment means less tax.

    Can I Keep A Job Even After I Start Collecting Retirement Dependents Or Survivors Benefits

    Yes, and many people do just that. People who are past full retirement age may work and earn any amount without losing any of their Social Security benefits.

    But before you reach full retirement age, Social Security will subtract money from your benefit check if you exceed a certain amount of earned income for the year . The limit applies only to earnings from work; it does not apply to income from such things as savings, investments, pensions, or rental property. In other words, earnings from these sources will not affect your Social Security benefits.

    The Social Security Administration has added a special twist for the year in which you reach full retirement age. During the 12 months prior to your birthday, you will lose one dollar of benefits for every three dollars you earn over a set monthly limit . After your birthday, you can earn any amount of money without losing benefits.

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    Learn How Social Security Works

    Knowledge is power and knowledge of your actual Social Security earnings history and benefit estimates are essential to increasing your benefit.

    And learn how the Social Security works. Do some fact-finding, gain an understanding about how the system works, and make your choices that best support your unique situation, says Freitag.;

    Robert Powell is the editor of TheStreets Retirement Daily www.retirement.thestreet.com and contributes regularly to USA TODAY. Got questions about money? Email Bob at rpowell@allthingsretirement.com

    Taxes On Social Security

    How to Get More Social Security When You Retire

    Another factor that is overlooked by singles and married couples alike is the impact of taxes. Retirement income needs to be viewed on an after-tax basis. Up to 85% of the Social Security benefits you receive can be taxed, though never 100%. With that in mind, there is a clever tax arbitrage strategy that people can implement if they also have an IRA. With Social Security benefits having a maximum taxability of 85%, each after-tax dollar from Social Security is worth more than each dollar you withdraw from your IRA.

    To take advantage of this arbitrage, individuals and couples should first begin taking IRA withdrawals before starting to take Social Security benefits. They would be essentially delaying the start of their Social Security to maximize its benefits and minimize the minimum distribution amounts that IRAs require in their early 70s. This strategy doesn’t work for those with large pensions, but for those with no pension or a small pension, it can help their retirement money work harder for them.

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    Don’t Earn Too Much While Collecting Benefits

    Next, know that if you work and earn more than a certain amount while collecting Social Security benefits, some of those benefit dollars will be withheld. According;to the Social Security Administration:

    If you’re younger than full retirement age during all of 2020, we must deduct $1 from your benefits for each $2 you earn above $18,240. If you reach full retirement age during 2020, we must deduct $1 from your benefits for each $3 you earn above $48,600 until the month you reach full retirement age.

    It’s not as bad as it seems, though, because;any dollars withheld are factored back into your future benefits, increasing them accordingly.

    Make Sure All Of Your Work Years Are Counted

    The Social Security Administration isnt perfect. Like all large federal department, they make mistakes. One of the biggest mistakes is a less than accurate accounting of your income, which they get from the IRS.

    The best way to make sure all of your working years are being counted is to create an online account with the SSA and keep an eye on what they know about your work history. You can do this by downloading your Social Security statement every year and comparing it with what youve filed with the IRS.

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    Congress Must Act Sooner Rather Than Later

    In theory, the AWI problem could be fixed anytime before 2022, when, for example, workers who turn 60 this year are first eligible to retire at the age of 62. But that delay would cause significant anxiety for these workers, whose future benefits would be at risk. Moreover, people decide when to retire based on projections of their incomes in their initial year of retirement and in the remainder of their lives. It would be most unfair to workers decision-making processes to have the expectations of their future incomes be uncertain for some period of time while they are trying to make such an important decision.

    Congress needs to act sooner rather than later to ameliorate this problem. One possibility would be to include a fix in the stimulus legislation to cope with the economic effects of the COVID-19 pandemic that Congress is currently considering.

    Can I Collect More Than One Type Of Benefit At A Time

    How Much Money Will You Get From Social Security?

    No. You may qualify for more than one type of Social Security benefit at a time, but you can collect just one. For example, you might be eligible for both retirement and disability, or you might be entitled to benefits based on your own retirement as well as on that of your retired spouse. You can collect whichever one of these benefits is higher, but not both.

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    Checklist For Your Social Security Claiming Strategy

    • Know your numbers. Find out your FRA, earnings history, and estimated benefits.
    • Stay current. Sign up for your most current statements on SSA.gov.
    • Do the math. Use calculators on SSA.gov to check out your monthly benefit options.
    • Get the facts. Don’t succumb to myths; use primary resources such as SSA.gov.

    How Are My Social Security Benefit Amounts Calculated

    The calculations are complicated. The amount of any benefit is determined by a formula based on the average of your yearly reported earnings since you began working.

    But to complicate matters further, Social Security computes your average earnings differently depending on your age. If you reached age 62 or became disabled on or before December 31, 1978, Social Security averages the actual dollar value of your total past earnings — and bases the amount of your monthly benefits on that amount.

    If you turned 62 or become disabled on or after January 1, 1979, Social Security divides your earnings into two categories: Earnings from before 1951 are credited with their actual dollar amount, up to a maximum of $3,000 per year; and from 1951 on, yearly limits are placed on earnings credits, no matter how much you actually earned in those years.

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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.

    Start Collecting Benefits As Early As Age 62

    Social Security: 10 Smart Ways to Get More Benefits

    The table above shows how much smaller your checks will be if you start collecting early — and you can start collecting regular retirement benefits as early as age 62. It might seem dumb to start early and get smaller checks, but remember that:

    • You might simply need the income early, perhaps due to an unexpected job loss.
    • While the checks will be smaller, there will be many more of them.
    • The system is designed so that for those who live average-length lives, they’ll get about the same total benefits no matter when they start collecting.

    If you think you stand a decent chance of living a shorter-than-average life due to poor health or family history, it can make good sense to start collecting early — you’ll get more out of the program that way.

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    Get Your Social Security Estimates

    The SSA website provides estimates for how much you’ll collect if you start receiving benefits at age 62, your full retirement age , and age 70. Remember that you don’t have to start taking your benefits at those milestone ages; you and your spouse can start collecting anytime between ages 62 and 70.

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