Who’s The Higher Earner
Compare the estimates for you and your spouse, and pay special attention to the difference between your estimates. The higher earner is the spouse with the larger primary insurance amounts .
When you’re deciding who will collect first and who should wait, consider having the lower earner collect first and having the higher earner wait. Over time, the higher earner’s increases will be worth more than the lower earner’s increases.
And if one spouse’s estimates are more than twice as high as the other’s, it might make sense for both of you eventually to collect on the same spouse’s earnings record.
In that situation, the spouse with the lower benefits can claim first based on his or her own earnings record and apply for spousal benefits later when the spouse with the higher benefits starts to collect.
The longer the spouse with the higher benefit waits to start collecting, the higher benefits will be for both spouses. Delaying the higher earning spouse’s benefits could also eventually increase the other spouse’s survivors benefits.
The Traditional Individual Social Security Benefit
One way to compare Social Security strategies is to review the total benefits received during your lifetime. For someone who is turning 62 this year the full retirement age is 66 years and 10 month. For this example, lets say the individual benefit is $1,000 per month at FRA. Should they:
· Collect $708 at age 62,
· Collect $1,000 at FRA, or
· Delay collecting until 70 and collect $1,253?
There is no one-size-fits all answer, as it becomes a game of life expectancy. As you can see from the chart below, the cross-over point or break-even age to maximize your lifetime benefit will depend on when you begin to collect.
Be reminded that there are important rules about collecting Social Security if you have earned income. Visit SSA.gov for more info.
of 0%. There is no earned income once Social Security benefits are received. All values are after-tax values.)
Lifetime Benefits Received With a Starting Age of 62, Full Retirement Age
Helpful resources: Visit to see your FRA based on your birth year and benefit reduction if you collect before FRA. Visit to see how earned income may affect your Social Security benefit.
How Do I Estimate My Monthly Retirement Benefits
You can estimate your monthly retirement benefits by calculating your PIA, the monthly benefit youre eligible to receive once you reach your FRA. To determine your PIA, the Social Security Administration uses your best 35 years of employment to arrive at your Average Indexed Monthly Earnings . If you havent worked for 35 years, some of the included earnings may be zero.
If you continue working after reaching your FRA, the SSA will automatically recalculate your benefits each year you continue to work. If your current income is greater than any of your previously calculated best 35 years, your benefits will be adjusted upward. The increase generally will be made in October of the following year but will be retroactive to January 1.
Social Security retirement benefits are automatically modified each year for cost-of-living adjustments , which are either positive or zero never negative. COLAs are based on the Consumer Price Index and have averaged between 1% and 2% over the past 10 years.
For more information, the SSA offers a helpful Social Security retirement calculator.
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Average Retirement Age In The Us
According to the Federal Reserve, the most common age to retire is 62. Though this coincides with the earliest age you’re eligible to draw Social Security, when you retire doesn’t necessarily have to revolve around Social Security or retirement account rules. What’s appropriate depends on who you ask.
Half of the respondents from the Federal Reserves 2019-2020 report on the Economic Well-Being of U.S. Households said they retired before age 62. Almost one-fourth of retirees retired between 62 and 64.
According to a 2019 survey by the Insured Retirement Institute, 24% of baby boomers plan to retire before they turn 65, 29% plan to retire between age 65 and 69, and 26% plan to retire at age 70 or older. Another 8% said they plan to never retire.
A 2018 Gallup poll of nonretired Americans found that people, on average, plan to retire at age 66.
People ages 18-29 expect to retire at age 63, on average.
People ages 30-49 plan to retire at age 65, on average.
People ages 50-64 plan to retire at age 67, on average.
Since 2009, Americans have said they expect to retire when they’re 65 to 67 years old, according to Gallup. Only 12% of Americans said they want to retire before age 60.
Many people consider their eligibility for various retirement benefits alongside their personal financial situation to pinpoint their optimal retirement age.
Why Did The Full Retirement Age Change
Full retirement age, also called “normal retirement age,” was 65 for many years. In 1983, Congress passed a law to gradually raise the age because people are living longer and are generally healthier in older age.
The law raised the full retirement age beginning with people born in 1938 or later. The retirement age gradually increases by a few months for every birth year, until it reaches 67 for people born in 1960 and later.
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How Retirement Benefits Work
Social Security replaces a percentage of your pre-retirement income based on their lifetime earnings. The portion of your pre-retirement wages that Social Security replaces is based on your highest 35 years of earnings and varies depending on how much you earn and when you choose to start benefits.
When you work, you pay taxes into Social Security. We use the tax money to pay benefits to:
- People who have already retired.
- People who are disabled.
- Survivors of workers who have died.
- Dependents of beneficiaries.
The money you pay in taxes isnt held in a personal account for you to use when you get benefits. We use your taxes to pay people who are getting benefits right now. Any unused money goes to the Social Security trust fund that pays monthly benefits to you and your family when you start receiving retirement benefits.
What A Social Security Break
In a nutshell, a Social Security break-even calculator can tell you when the best age is to start taking Social security benefits, in terms of how much money you could expect to receive over time.;Going back to the previous example, lets assume that you track your benefit amounts over a 10-year, 20-year and 30-year period. Heres how your total benefits received would look over each of those periods, for all three starting points.
Your cumulative benefits after 10 years:
- $144,000, starting at age 62
- $122,400, starting at age 66
- $52,800, starting at age 70
Your cumulative benefits after 20 years:
- $288,000, starting at age 62
- $326,400, starting at age 66
- $316,800, starting at age 70
Your cumulative benefits after 30 years:
- $432,000, starting at age 62
- $530,400, starting at age 66
- $580,800, starting at age 70
You can see that youd draw the most Social Security benefits in total if you wait until age 70 to start taking them, assuming you live to age 100. But that could be a big if when youre not in the best health.
What you have to keep in mind when using a Social Security break-even calculator is that the numbers are hypothetical. They dont take into things that could affect your ability to draw benefits or how far those benefits might go, such as:
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Claiming Social Security Early Reduces Benefits
You can claim your Social Security retirement benefits as early as 62 but you will receive a smaller amount if you do that. How much your benefits will be reduced depends on your age when you claim Social Security. For example, lets say you are eligible for 100% of your benefits at age 67, which is the full retirement age for anyone born in or after 1960:;
- If you claim Social Security early at age 62, your benefit will be reduced by 30%
- If you claim early at age 63, your benefit will be reduced by 25%
- If you claim early at age 64, your benefit will be reduced by 20%
- If you claim early at age 65, your benefit will be reduced by 13.3%
- If you claim early at age 66, your benefit will be reduced by 6.7%
Under this example, if you were eligible for $1,000 a month at your full retirement age of 67 then the benefit would be reduced to $700 a month if you claimed at 62; $750 if you claimed at 63; and so on, according to the Social Security Administration. The reduction is calculated each month, not on a yearly basis, so every month you wait after age 62 will mean a slightly bigger Social Security check.;
- Social Security Basics: 12 Things You Must Know About Claiming and Maximizing Your Social Security Benefits
Before You Make Your Decision
There are advantages and disadvantages to taking your benefit before your full retirement age. The advantage is that you collect benefits for a longer period of time. The disadvantage is your benefit will be reduced. Each person’s situation is different. It is important to remember:
- If you delay your benefits until after full retirement age, you will be eligible for delayed retirement credits that would increase your monthly benefit.
- That there are other things to consider when making the decision about when to begin receiving your retirement benefits.
Social Security Benefits For Children
A minor child or an adult child with a disability may be eligible for Social Security benefits if the parent receives retirement or disability benefits. The child must be one of the following:
- Under the age of 18
- A high school student up to age 19
- An unmarried adult who became disabled before the age of 22
Family income limits may also apply. Dependent child benefits begin when a retired worker’s benefits start. They end when the child turns 18 . The disabled person may then qualify for continuing benefits as an adult who is unable to work.
Social Security Disability Programs
In addition to retirement benefits, the Social Security Administration manages two programs that provide benefits to people who are disabled or blind.
- Social Security Disability Insurance Program
- SSDI supports disabled or blind individuals by providing benefits based on their workers contributions to the Social Security trust fund. Your contributions are based on your earnings or your spouses or parents earnings while in the workforce. Your dependents may also be eligible for SSDI benefits based on your earnings.
- Supplemental Security Income Program
- SSI benefits are paid out as cash assistance to people with limited incomes and resources who are elderly, blind or disabled. These benefits may also include blind or disabled children. SSI payments are a federal benefit funded by the general fund of the United States not the Social Security trust fund. Some states provide additional state supplemental benefits in addition to the federal SSI payments.
In some cases, people may be eligible for both SSI and SSDI at the same time. The Social Security Administration calls these concurrent benefits. This can happen when a disability qualifies you for Social Security Disability Benefits, but you only get a small amount of monthly SSDI benefits. This may qualify you to receive SSI benefits as well.
Comparing SSDI and SSI Programs
|Up to 85%|
Income Taxes for Other Benefit Programs
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How To Calculate Social Security Benefits
Lets say your FRA is 66. If you start claiming benefits at age 66 and your full monthly benefit is $2,000, then youll get $2,000 per month. If you start claiming benefits at age 62, which is 48 months early, then your benefit will be reduced to 75% of your full monthly benefitalso called your primary insurance amount. In other words, youll get 25% less per month, and your check will be $1,500.
That reduced benefit wont increase once you reach age 66. Rather, youll continue to receive it for the rest of your life. It may go up over time due to cost-of-living adjustments , but only slightly. You can do the math for your own situation using the Social Security Administration Early or Late Retirement Calculator, one of a number of benefit calculators provided by the SSA that can also help you determine your FRA, the SSAs estimate of your life expectancy for benefit calculations, rough estimates of your retirement benefits, individualized projections of your benefits based on your personal work record, and more.
Applying For Social Security
- ;;; Generally, you should apply for Social Security retirement benefits three months before you want your benefits to begin.; Even if you dont plan to receive benefits right away, you should still sign up for Medicare three months before you reach age 65.
- ;;; If you were born before 1938 and you meet all other requirements, you can receive benefits beginning with the first full month you are age 62.; However, if you choose to begin receiving benefits before age 65, your benefits will be reduced to account for the longer period over which you will be paid.
- ;;; The full retirement age is 65 for persons born before 1938.; The age gradually rises until it reaches 67 for persons born in 1960 or later.; Social Security benefits are payable at full retirement age for anyone with enough Social Security credits.; As you work and pay taxes, you earn credits that count towards eligibility for future Social Security benefits.; You can earn a maximum of four credits each year.; Most people need 40 credits to qualify for benefits.; People who delay retirement beyond full retirement age get special credit for each month they dont receive a benefit until they reach age 70.
- ;;; To find out what your retirement age is, use the Social Security Retirement Age Chart at www.ssa.gov
- ;;; You should speak with a Social Security representative in the year before you plan to retire.; It may be to your advantage to start receiving your retirement benefits before you actually stop working.
ave questions?;Call at 874-4618.
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Social Security Survivor Benefits For Spouses
Surviving spouses can receive benefits based on the benefit amount that the deceased was receiving from Social Security at the time of death.
- A surviving spouse can get reduced benefits as early as age 60. Full benefits are available at full retirement age. Benefits are for life.
- A surviving spouse who has a disability can collect benefits as early as age 50. The benefit begins upon the death of the retiree and continues until the surviving spouse is age 65. At that point, they are eligible for the aged benefit.
- Surviving spouses can get benefits at any age if they take care of their spouses child who is under age 16 or disabled and receives Social Security benefits.
- Surviving divorced spouses who are age 60 or older can get survivor benefits if the marriage lasted at least 10 years. Divorced spouses dont have to meet the length-of-marriage rule if they take care of the former spouses child who is younger than age 16 or disabled.
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Timing And Your Health Coverage
Your health insurance coverage can also play a role in deciding when to claim Social Security benefits. Do you have a health savings account to which you would like to keep contributing? If so, note that if youre age 65 or older, then receiving Social Security benefits requires you to sign up for Medicare Part A, and once you sign up for Medicare Part A, youll no longer be allowed to add funds to your HSA.
The SSA also cautions that even if you delay receiving Social Security benefits until after age 65, you might still need to apply for Medicare benefits within three months of turning 65 to avoid paying higher premiums for life for Medicare Part B and Part D. If you are still receiving health insurance from your or your spouses employer, however, then you might not yet have to enroll in Medicare.
On March 17, 2020, all Social Security offices were closed completely due to the COVID-19 pandemic. As of Aug. 5, 2021, they are only open by appointment, and to get an appointment, you need to be in a limited, critical situation. Most people will have to transact their business online, by phone, or through the mail.