Wednesday, August 10, 2022

What Age Apply For Social Security

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You Expect Your Investments To Grow Faster Than The Increased Benefit

At What Age Should I Apply for Social Security Benefits?

If youre the next Warren Buffet, its possible you could do better taking Social Security early and investing the money than you could by waiting to take a larger benefit later. When weighing the best decision, consider the inflation rate, the rate your benefits increase and how much you can expect to earn in your portfolio. Given that benefits increase by 8 percent per year for each year you wait after full retirement age, however, its hard to outperform that rate of increase in the market. These safe investments do have high returns.

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Social Security Benefits For Surviving Spouse

Understanding survivor benefits is also important when deciding the best age to file.

If one spouse dies, the surviving spouse is eligible for survivor benefits. If both spouses are receiving benefits, the situation is pretty simple; the surviving spouse keeps the higher of the two benefits and the other benefit goes away.

For example, John and Sue are married. John has a benefit of $1,800 and Sue has a benefit of $2,100. If John dies, Sues benefit will stay the same at $2,100. If Sue dies, Johns benefit will get a bump to $2,100.

This is the person with a higher benefit should often wait until a later age to apply for benefits. The highest benefit will last longerit stays around even after the first spouse dies. When you delay the highest benefit, you increase it even further, thus maximizing your total benefits. More on this below.

If spouses havent started receiving benefits yet, then the survivor has the option to start survivor benefits at age 60, while still delaying their own benefit up until age 70. Full details on survivor benefits here.

Report The Death Of A Social Security Or Medicare Beneficiary

You must report the death of a family member receiving Social Security or Medicare benefits. The Social Security Administration processes death reports for both. Find out how you can report a death and how to cancel benefit payments. In addition to canceling SSA and Medicare benefits, find out what other benefits and accounts you should cancel.;

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Tips For Ensuring A Comfortable Retirement

  • If you want to build a retirement plan, a;financial advisor;can help you reach your retirement goals.;SmartAssets free tool;can pair you with advisors in your area based on your needs.;Get started now.
  • Save, save, save. To be able to put off taking Social Security benefits until youre 70, youll need to have enough stashed away to live off of until then. Our retirement calculator can help you figure out how much youll need to save to retire comfortably.
  • Start saving early, and take advantage of employer matches. With our;401 calculator, you can see how much your 401 will be worth when you reach retirement.
  • Think hard about where you want to retire. Not all states are equally tax-friendly to retirees. Use our retirement tax-friendliness tool;to see how tax-friendly your home state is, and whether Social Security benefits are taxable at the state level there.

Early Retirement Vs Disability

What Is The Best Age To Apply For Social Security?

Because the disability process can be long and complicated, and because for some, receiving disability benefits carries a stigma, some individuals choose to take early retirement. However, collecting Social Security retirement early rather than applying for disability has drawbacks that should be considered before making this decision.

If you take early retirement once you reach the age of 62, your retirement benefit amount will be permanently reduced. The amount your benefit is reduced depends on the number of months you have until full retirement age . This is called the “reduction factor.”

On the other hand, if you are awarded Social Security disability benefits , your benefit amount will be equal to what you were entitled to receive once you reached your full retirement age. This is because SSDI and retirement benefits are based on how much money you paid to the SSA. Once you reach full retirement age, your benefits simply convert to retirement benefits, but your payment amount will not change. Your future retirement benefits are not reduced even though you were able to collect Social Security early.

Also, you will get the benefit of a “disability freeze.” For the purpose of calculating your monthly Social Security benefit, the disability freeze disregards any low earning or zero earning years for the period that your disability prevented you from working.

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Benefit Amounts Vary Depending On Your Social Security Retirement Age

Your Social Security retirement age and the amount you receive varies depending on several factors. For example, the earliest age you can collect your Social Security retirement benefits is 62, but there is an exception for widows and widowers, who can begin benefits as early as 60. If you start collecting benefits early and continue to work, your benefits may be reduced.

Here’s how this works;with the basics on Social Security claiming ages from 60 to 70.

Claiming Social Security At Age 65

Those whose Full Retirement Age;is 65 are already that age or older. For those born after 1955 and before 1960,;Full Retirement Age;is 66 and some months. By retiring at age 65, those beneficiaries lose at least 12 months worth of increases. For those born in 1960 or after,;Full Retirement Age;is 67, so they lose up to 24 months of increases if they retire at age 65.;

Below, we show how a person born in 1960 and entitled to a full benefit of $2,500 could see his or her monthly benefit change based on claiming age:

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How To Receive Federal Benefits

To begin receiving your federal benefits, like Social Security or veterans benefits, you must sign up for electronic payments with direct deposit.

If You Have a Bank or Credit Union Account:;

  • Call the Go Direct Helpline at .

If You Don’t have a Bank or Credit Union Account:;

Make Changes to an Existing Direct Deposit Account:

Learn how to make changes to an existing direct deposit account. You also may contact the federal agency that pays your benefit for help with your enrollment.

When Can I Start Collecting Social Security

When Should You Apply for Social Security?

The minimum age to claim benefits is 62. If you are turning 62 and need the income from Social Security to support yourself, then you can start claiming your benefits now. However, if you have enough other income to keep you going until you are older, then you may want to delay to increase the size of your monthly benefit.

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

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.

Benefits May Be Taxable

You will have to pay taxes on your benefits if you file a federal tax return as an individual and your total income is more than $25,000. If you file a joint return and you and your spouse make more than $32,000 jointly, you will have to pay taxes on your benefits. For more information, call the InternalRevenue Service at 800-829-3676.

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How Can The Social Security Disability Programs Be Improved To Increase Economic Security And Work Opportunities For Beneficiaries

Disability Insurance and Supplemental Security increase economic security for millions of disabled workers. For beneficiaries whose conditions improve, the programs also provide important incentives and supports for returning to work. Still, the programs could be further strengthened to increase disabled workers economic security and provide a more seamless transition for those who are able to return to work.

Modernize Supplemental Security

The value of Supplemental Security benefits has eroded considerably since the programs inception in 1972, as the programs income exclusions and asset limits have not kept pace with inflation and living standards. The current maximum benefit is equivalent to just three-quarters of the also-outdated federal poverty line for a single person. The general income exclusion and earned income exclusion have never been increased. To address this erosion, H.R. 1601, the Supplemental Security Restoration Act, sponsored by Rep. Raul Grijalva and introduced in Congress in April 2013, would increase the monthly maximum benefit to $937, which is 100 percent of the current federal poverty line, and would increase the general income disregard to $110 per month and the earned income disregard to $357 a month. Increasing the income exclusions and indexing them to inflation going forward would restore the monthly benefit amount to its intended value and significantly increase beneficiaries economic security.

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Ten Years Qualifying Residence

Should You Delay Applying For Social Security Past Age 70 ...

Ten years qualifying residence is satisfied if the claimant has:

  • been an Australian resident continuously for at least 10 years at any point in the past, OR
  • been an Australian resident for 2 or more periods that in total exceed 10 years, AND
  • at least one of those periods is of 5 years duration or more.

Act reference:SSAct section 7 Australian residence definitions, section 43 Qualification for Age

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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.

The Downside Of Claiming Early: Reduced Benefits

Consider the following hypothetical example. Colleen is 62 as of 2022. If Colleen waits until age 67 to collect, she will receive approximately $2,000 a month. However, if she begins taking benefits at age 62, she’ll receive only $1,400 a month. This “early retirement” penalty is permanent and results in her receiving up to 30% less year after year.

However, if Colleen waits until age 70, her monthly benefits will increase another 24% over what she would receive at her FRA, to a total of $2,480 per month.1 If she were to live to age 89, her lifetime benefits would be about $112,000 more, or at least 24% greater, because she waited until age 70 to collect Social Security benefits.2

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What If I Delay Taking My Benefits

If you retire sometime between your full retirement age and age 70, you typically earn a “delayed retirement”;credit . For example, say you were born in 1951 and your full retirement age is 66. ;If you started your benefits at age 68, you would receive a credit of 8% per year multiplied by two . This makes your benefit 16% higher than the amount you would have received at age 66.;.

That higher baseline lasts for the rest of your retirement, and serves as the basis for future increases linked to inflation. While its important to consider your personal circumstancesits not always possible to wait, particularly if you are in poor health or cant afford to delaythe benefits of waiting can be significant.

If you decide to wait past age 65, you may still need to sign up for Medicare.; In some circumstancesyour Medicare coverage may be delayed and cost more if you do not sign up at age 65.

To review your situation, your annual Social Security statement will list your projected benefits at age 62, full retirement age, and age 70,;assuming you continue to work and earn about the same amount until age 62, full retirement age, or age 70 before retiring. If you need a copy of your annual statement, you can request one from the Social Security Administration .

Why Age 60 Is Key For Your Social Security Benefit

Can I Apply For Social Security Retirement Benefits In Advance of Age 62

Allworth Co-CEO Scott Hanson answers a reader’s question about Social Security.

Ive always believed that the amount of Social Security Ill receive is based upon the age I retire and the amount of money Ive earned. But I just today heard that the level of something called the national average wage index during the year you turn 60 has a major impact on your future Social Security payments.

As Ill be 60 this November, please tell me, this cant possibly be true, can it?

-Ruthie K

Dear Ruthie:

Unfortunately, not only is what youve heard true, but almost no one else realizes it, either.

Thats because, as Ill explain in a moment, what is happening to wages in America right now hasnt happened in 80 years.2 And, most people dont realizebecause its never been an issue in our lifetimesthat your Social Security payments are forever tied to the performance of this wage index during the year you turn 60.

Ruthie, frankly, this is being underreported and its a big deal.

First, as you mentioned above, while there are other factors, most pre-retirees believe that their future Social Security benefit amount is calculated by averaging their 35 highest years of wages, along with the age at which they retire. And, historically, when it comes to those key numbers , thats pretty much the case.

And for the more than four million people born in 1960? Unless something drastic happens, depending on their other sources of income, this could mean trouble.

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Signing Up For Direct Deposit

When you sign up for Social Security, it is important that you bring your banking information so that you can sign up for Direct Deposit. You will need your bank routing number as well as the checking account number. Both of these numbers are found at the bottom of your personal check. This is the best way to receive the benefits because it is automatically added to your account.

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.

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Make Payments To The Federal Government

Learn how to use Pay.gov to make secure, electronic payments to government agencies from your checking or savings account. You can use the online service for VA medical care copayments, U.S. district court tickets, U.S. Coast Guard;merchant mariner user fee payments, and more.

If you need help, contact Pay.gov customer service.;

What If The Trust Fund Runs Out

The ins and outs of applying for Social Security benefits

If the trust fund runs out, the current projections according to the Social Security Trustees report is that enough taxes will be collected to pay 7879% of promised benefits.

This raises the question, Should we take our benefit early to lock it in? But taking benefits early will not exempt you from a cut if the trust fund is depleted. The current law is that the cut is across the board, which means every benefit will be cut by 2122% whether you are currently receiving benefits or not. Congress would have to pass a bill to change this.

From what we know currently, the above seems to be the worst-case scenario. It assumes that Congress, instead of stepping up to the plate and agreeing on reform, decides not to take action. We do know that there has been a bi-partisan committee established to work on solutions to the issue, but no bills have been drafted at this time to propose for debate.

In fact, as of December 2020, the trust fund is still increasing. 2020 results:

  • Total income: $1.118 trillion
  • Net increase in assets: $ 11 billion

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