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How To Start Collecting Social Security At Age 66

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Social Security For Retired Worker Spouses

Collecting Social Security at Age 66

If you have a work history that qualifies you for Social Security on your own, you may still be eligible for spousal benefits. All of the same requirements apply , but you can’t receive both your benefits and spousal benefits.

If Kevin qualifies for a $1,000 full retirement age benefit on his own record and a $500 spousal benefit, he would only get the $1,000 from his own work history, not $1,500 total. Alternatively, if those numbers are switched, and Kevin only qualified for $500 on his own record and $1,000 in spousal benefits, the spousal benefit is paid on top of a person’s own benefits to make up a difference. Meaning $500 would be distributed as Kevin’s own benefits and $500 would be distributed as spousal benefits, maxing out at $1,000.

When Can Someone Stop Working And Still Collect Social Security

You can begin collecting Social Security as early as age 62, although you will not receive full benefits. Your benefit amount will be slightly reduced from what it would have been had you waited until full retirement age. The longer you wait to collect your benefits, the higher the amount will be. Upon reaching age 70, your benefit will be the highest amount possible. There is no need to wait past age 70 to begin collecting benefits. Also, at that point, you can earn additional income from another job or investments without any negative effects on your benefits.

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

RETIREMENT AGE
SSA deducts $1 from your benefits for every $3 you earn above the limit

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In A Rush To File For Social Security Benefits At Age 62 Many People Are But Slow Down And Do The Math First Or You Might Regret It

When it comes to claiming Social Security retirement benefits, you may want to consider waiting to start benefits when youre 70.

That means not starting benefits when youre 62 , nor even full retirement age .

I know that starting benefits at age 70 might be a tough thing to reconcile with but it doesnt mean that you have to work until youre 70.

Here are three reasons why delaying taking your Social Security benefit to age 70 is a decision you may want to consider:

Taking Social Security At 62

When Can You Collect Social Security and When Should You ...

Unless you meet a few clear-cut criteria, you’ll want to give the idea of taking Social Security at age 62 quite a bit of thought before you apply for benefits. Unless you have a critical illness, you’ll likely receive more income over your lifetime by starting your benefits later.

If you live to age 84, you can get varying amounts, depending on whether you start Social Security at age 62, 66, or 70. To do the math, multiply your monthly benefit amount times twelve months, then multiply that by the number of years you expect to receive benefits.

  • Age 62: $835 × 12 × 22 = $220,440
  • Age 66: $1,114 × 12 × 18 = $240,624
  • Age 70: $1,470 × 12 × 14 = $246,960

You get more total income by waiting until age 70 to begin benefits. If you live longer, the age 70 plan works even better for you than the examples above.

For instance, if you start your benefits at 70 and live to age 94, you’ll receive over $423,360 from Social Security. If you’d started at 62, you’d only get $320,640.

In general, the longer your life expectancy, the longer you should wait to start drawing Social Security.

Below are a few general guidelines you can use to determine whether it makes sense to take Social Security retirement benefits at age 62.

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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.

Why Your Age Matters

Here’s a snapshot of how Social Security works: If you work and pay into the system, you become eligible to receive your benefits in full once you hit what’s known as your full retirement age. For those born between 1943 and 1954, the full retirement age is 66. Anyone born in or after 1960, meanwhile, will have a full retirement age of 67. And for those born between 1955 and 1959, full retirement age falls somewhere between 66 and 67.

The following table will help you find your full retirement age depending on your year of birth:

Year of Birth

DATA SOURCE: SOCIAL SECURITY ADMINISTRATION.

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What Is The Future Of Social Security

If youre skeptical about the future of Social Security or wary of potential changes such as means testingwhich could reduce or eliminate benefits for the wealthy, or an increase in the full retirement ageyou may be tempted to start benefits early, under the assumption that its better to have something than nothing. The 2020 annual report from the Social Security Trustees, released in April, projects that the Social Security Trust Fund has enough resources to cover all promised retirement benefits until 2035, and will cover 79% of scheduled benefits for new retirees thereafter without changing the current system. The 2020 report does not include an adjusted projection due to impacts, if any, from the pandemic.

Over the longer term, changes such as later benefit dates or means testing may be considered.

In any situation, if youre particularly concerned about the future prospects for Social Security, thats a good reason to save more, and earlier, for your retirement.

Is Your Full Retirement Age Affected By Where You Live

Collecting Social Security after 67 How They Feel About It Now

Your FRA is not affected by where you live. Most Social Security rules, including those that determine benefit amount and claiming age, are set by federal law. However, some states do tax Social Security benefits, so where you live can affect tax levels on your retirement income. But again, the age at which you claim benefits won’t affect your tax rate — your income is the key factor.

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To Claim Or Not To Claim

If you claim your Social Security benefits once you reach your full retirement age, you’ll get 100% of whatever amount you’re eligible for based on your work history but if you delay taking benefits, you’ll get even more. So if your full retirement age is 66, and you’re retired, about to leave the workforce, or simply need money, taking those benefits is a good idea. On the other hand, if you’re still working full-time at 66, are semi-retired with a source of income, or have enough cash flow to pay your current living expenses, you should hold off on taking benefits at 66, even if that’s your designated full retirement age.

Why Start Early Or Late

So why start collecting your benefits early or late? Well, if you think you’ll likely live an average-length life , start early. If you just need the money — perhaps because you lost your job or experienced a health crisis before you planned to retire — start early. If you would like to retire early and have managed to save enough to allow you to live off your various income sources and Social Security, start early.

On the other hand, if you think you stand a good chance of living an extra-long life, perhaps because many of your relatives have done so, consider delaying starting to collect if you can. Delaying can also make sense if you’re married, as it can be part of a strategy.

For example, if you and your spouse have had rather different earnings histories, you might start collecting the benefits of the spouse with the lower lifetime earnings record on time or early while delaying starting to collect the benefits of the higher-earning spouse. That way, you’ll get some income earlier, and when the higher earner hits 70, they can collect extra-large checks based on their earnings. Also, should that higher-earning spouse die first, the surviving spouse can collect that bigger benefit.

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How A Social Security Break

Figuring out the right time to start taking Social Security benefits isnt always a straightforward process. A Social Security break-even calculator can help you get some perspective on the numbers so you know what you stand to gain or lose by taking benefits earlier versus later.

Social Security break-even calculators help you find the best age to start taking retirement benefits. They do this by comparing your cumulative Social Security retirement benefits paid at age 62, your full retirement age and at age 70 and estimating how long it would take the benefits paid at age 70 to break even with benefits paid starting at age 62.

Heres a simple calculation to give you an idea of how a Social Security break-even calculator works. Say that you have the option to begin receiving $1,200 a month in benefits at age 62. Youd receive $1,700 in benefits if you wait until full retirement age at 66. Or you could receive $2,200 a month in benefits by delaying them until age 70.

The break-even point represents when the cumulative benefits even out. So if you wait until age 70 to start taking benefits, it would take you until age 79 to break even with the benefit amount youd receive if you started taking them at age 62. If you were to start receiving benefits at age 66, it would take you until age 75 to break even with the benefits youd receive if you started them at 62.

Can I Reverse My Social Security Benefits

How Do You Apply for Social Security at Age 62?

If you claim Social Security and regret it, you do have the option to reverse that decision, although you have a limited window of time in which youre able to do so. Since you only have a limited period of time to reverse your decision to claim your benefits , its critical you evaluate your options before you file to help ensure youre not leaving money on the table.

If you do decide you want to withdraw your application, you must fill out Social Security Form SSA-521 and state why youre choosing to do so. This form must be submitted within 12 months of the date when you filed, and you must repay all the benefits you and your family received based on your application. You must also provide written consent with your withdrawal from anyone who received benefits based on your initial application.

However, if you miss the 12-month window to withdraw your filing, you can wait until your FRA to suspend benefits. The 8% growth on your benefits for each year beyond FRA would then be based on what you were receiving when you suspended. Plus, if you suspend your benefits and your spouse was receiving spousal benefits, you will also suspend their spousal benefits.

If you are also entitled to railroad or veterans benefits, you should contact the U.S. Railroad Retirement Board or U.S. Department of Veterans Affairs to see how your withdrawal affects those benefits. These organizations are responsible for their own programs separate from Social Security.

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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

Your Thinkingon When To Start Collecting

Of course, your situation will be different than mine, so do your own thinking and crunch your own numbers. You may be surprised to see that you can start collecting early and retire early — or you may see that working longer, if you can, will be better for your financial health. Just know that many people end up retiring earlier than planned, so beef up those retirement accounts as much as you can, as soon as you can.

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How Much Money Can I Make Before Social Security Will Reduce My Benefits

It depends on your age. If you have not yet reached full retirement age, then you can only earn $18,960. If you make more than that, then your benefits will be reduced. That limit increases to $50,520 the year in which you reach full retirement age. Suppose you reach normal retirement age in September. Then from January to September, the higher limit will apply. Upon actually reaching normal retirement age, the limit is removed altogether. This means that you can earn an unlimited income with no effect on your benefits. This age is anywhere from 65 to 67 depending on the year in which you were born.

Whats Full Retirement Age

Collecting Social Security at 62 How They Feel About It Now

Full retirement age is when youre eligible to receive full Social Security benefits. Your full retirement age depends on your birth year: Under current law, if you were born in 1951 or later, your full retirement age is now some point after age 65all the way up to age 67 for those born after 1959. If you were born before 1951, youve already reached age 66 and full retirement age.

Retirement ages for full Social Security benefits

If you were born in

Your full retirement age is

1950 or earlier

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Are My Social Security Benefits Taxable

Many people believe that their Social Security benefits are tax-exempt, but this simply isn’t the case for many retirees. In fact, the Social Security Administration estimates that 52% of beneficiaries paid income tax on their benefits in 2015, and 56% of all beneficiary families will owe income tax on their benefits from 2015 2050.

Whether your benefits will be taxed and what percent of your Social Security benefits are taxed depends on your provisional income. This is different than your adjusted gross income . Your provisional income includes 50% of your Social Security benefits plus income from:

  • Job earnings
  • Investment returns and dividends
  • Interest from tax-exempt bonds

Despite the number of things that make up your provisional income, the threshold to have a percentage of your benefits included in your taxable income is relatively low. If your income exceeds $25,000 , up to 50% of your benefits may be taxable. If your provisional income is over $34,000 , up to 85% of your benefits may be taxable. Keep in mind, this doesnt mean that your benefits will be taxed at a 50% or 85% tax rateits the maximum percentage of your benefits that will be included in your taxable income. The portion of your Social Security benefits that is taxable is taxed at your marginal income tax rate. See the table below for provisional income thresholds and percent of benefits taxed.

Filing Status
> $44,00085%

Can A Person Who Is Due A Public Pension Also Collect Social Security Benefits

Two rules could reduce benefits for people who are also entitled to a public pension on earnings not covered by Social Security.

One rule is the windfall elimination provision , which applies to people who worked at jobs covered by Social Security but also worked as noncovered government employees and are due a pension.

When it is time to claim benefits, many people are unprepared for these cuts, Mr. Blair said. Possible W.E.P.-related reductions are not reflected in the workers Social Security statement, which shows the history of annual earnings and estimates of future benefits only for jobs covered by Social Security.

You can have someone who looks at the Social Security statement and it shows a benefit of $1,000 at full retirement age, Mr. Blair said. But the individual a teacher who is due a public pension, for example may be surprised later if the benefit is much lower, he said.

In addition to W.E.P. reductions, a government pensioner who applies for a Social Security spousal or survivor benefit can face reductions. The government pension offset reduces those benefits by two-thirds of the government pension.

Mr. Blair said individuals who are eligible for a public pension and Social Security can estimate their future benefits by running the numbers on the W.E.P. and G.P.O. calculators.

Pensioners are exempt from the W.E.P. offset if they paid into Social Security for 30 years or more in jobs with substantial earnings .

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