Monday, May 16, 2022

What Age Are You Eligible For Social Security Benefits

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Are Social Security Benefits Taxable At Full Retirement Age

Who Is Eligible for Social Security Disability Benefits

Your age does not have an impact on whether you will owe tax on Social Security benefits. Depending on your earnings, you may pay federal taxes on Social Security benefits regardless of the age at which you claim.

Social Security benefits are taxed on amounts exceeding the “provisional income” limit set by the IRS. To calculate your provisional income, add up all non-Social Security sources of income, including nontaxable income such as municipal bond interest, and include half of your annual Social Security income.

Single filers earning provisional income between $25,000 and $34,000 and married joint filers earning between $32,000 and $44,000 will owe income taxes on 50% of their Social Security benefits. For single filers with provisional income above $34,000 and married filers above $44,000, up to 85% of Social Security benefits will be taxable.

Social Security Other Earned Income

If you receive Social Security benefits prior to your full retirement age, your benefits will be reduced if you work and your earned income is over a certain threshold.

Earned income is income from employment or self-employment.

For 2020 that threshold is $18,240.

For any earned income above this level, your Social Security benefit will be reduced by $1 of every $2 of earned income.

If you were to reach your full retirement age in 2020, the benefit reduction would be $1 for every $3 of earned income over a threshold of $48,600.

Note these earned income thresholds generally increase annually.

There are no limits on earned income, and no benefit reductions due to earned income once you reach your FRA.

Any benefits lost due to earning too much will be paid to you starting when you reach your full retirement age.

Even with this repayment, if you are working and know your earned income will exceed the income threshold it may behoove you to wait until either your full retirement age or at least to a time when your earned income will not cause a benefit reduction to file.

Just like any Social Security claimant, filing later will result in a higher initial benefit.

If you file for benefits and then return to work, you can file for a once per lifetime withdrawal of benefits.

This must be done within 12 months of your initially receiving benefits.

All benefits paid to you, plus any that were paid to family members based upon your earnings record must be fully repaid.

The Best Age For Social Security Retirement Benefits

As you get older, you start thinking more about retirement distributions than contributions. One of the biggest questions that near-retirees have is, What is the best age to start collecting Social Security benefits? Most take the benefits right away, but that isnt always the best option. A financial advisor can help you optimize a plan for your retirement needs. You can start collecting Social Security benefits any time between ages 62 and 70. Lets take a look at how Social Security works, and what you need to know when deciding the best age for your retirement.

The best age for Social Security benefits depends on personal and financial factors, like your current cash needs, retirement plans, health and family history. Be sure you weigh the decision carefully and dont hesitate to find a financial advisor to talk to if need be. The age you choose to start taking Social Security will affect the monthly amount you receive for the rest of your life.

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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.

Although the cost-of-living adjustments announced each year are usually only slight increases, Social Security benefits will increase by 5.9% in 2022, marking the largest increase since 1982.

Minimum Age To Claim Social Security Retirement Benefits

How Medicare and Social Security Work Together

You need to have earned at least 40 credits in order to claim old-age benefits, while the Social Security Administration look at the average of your 35 highest-earning years along with other factors to determine your monthly benefit when you claim.

You are able to start collecting benefits once you hit the age of 62, so long as you have enough credits, but the longer you are in work the higher sum you are likely to receive when you apply for benefits.

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Social Security Disability Insurance

Social Security Disability Insurance provides benefits to the worker and certain members of their family if they have worked both long enough and recently enough to be insured.

There is an application process that is thoroughly reviewed by an agency in your state of residence.

Qualifying for Social Security disability coverage can be difficult.

If your application is rejected, there is an appeal process.

If you are receiving Social Security disability benefits at the time you reach your full retirement age, these benefits will automatically convert to Social Security retirement benefits.

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, your Social Security benefits may be temporarily reduced. The reduction is $1 for every $2 of earned income over $18,960 in 2021 . During the year when you reach your FRA, your benefits will be reduced by $1 for every $3 in income over $50,520 in 2021 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.

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How Does Social Security Affect Medicare And My Retirement Benefits

Although Medicare is a separate benefit offered by the government, it often times goes hand in hand with Social Security retirement benefits as a means of providing a financial safety net for retired workers.

Medicare is the government sponsored health insurance plan for people who are at least 65 years old. The only exceptions to this are the disabled or those who have permanent kidney failure, both of whom can get Medicare at any age.

Medicare is broken into four parts:

Medicare Part A Hospital insurance that helps pay for in-patient hospital care and some follow-up services.

Medicare Part B Medical insurance that helps pay for doctors services, outpatient hospital care and related medical services.

Medicare Part C Medicare Advantage Plans allow people to combine Part A and Part B to get medical services from a single provider organization.

Medicare Part D Prescription drug coverage helps pay for prescribed medications.

Medicare and Social Security benefits are linked in that when you turn 65 years old, your Part A Medicare hospital insurance begins automatically. If you live in the United States or U.S. territories, youll also be enrolled in Part B Medical insurance coverage as well.

Regardless of whether or not youre getting Social Security benefits, you should sign up for Medicare about three months before your 65th birthday.

How Much Will Your Parent Receive

Best Age to Claim Social Security?

Your parents benefits will depend on how much they earned while they worked. The benefits amount is related to how much they earned. If they had some years in which they either didnt work or didnt earn very much money, their benefits may be less than what they might have otherwise received by working steadily. The amount will also be affected by the ages at which your parents retire. People who retire when they reach age 62 receive less than if they wait.

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Retirement Age For Those Born After 1937

Year Born 1960 or later 67 years

The system does provide for early retirement at age 62, but also offers higher benefits for people who wait to make their claims after reaching full retirement age. For more information, see Nolo’s article Social Security Benefits: Retirement, Disability, Dependents, and Survivors.

Do You Get A Full Month Social Security On The Month Of Your Birthday

Generally, the day of the month you receive your benefit depends on your birthday, or that of the person on whose record youre collecting benefits: If the birthday is between the 1st and the 10th of the month, you will receive your first payment on the second Wednesday of the month after that birthday.

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How To Appeal A Social Security Claim That Has Been Denied

Almost half of all Social Security benefit applications are denied. While the vast majority of these deal with disability benefits, sometimes retirement benefits are denied as well.

Some of the reasons why a retirement benefit application might be denied include:

  • You have not accumulated enough work credits in your work life
  • Your application has missing or incorrect information
  • You submitted your application too early. You cant apply until about four months before you turn 62.
  • You are already receiving Social Security disability benefits. Retirement and disability payments serve the same purpose to provide financial security when a person is not able to work any longer.
  • If you are a surviving spouse, you do not meet the minimum age requirement or you got remarried before you turned 60.

If your benefit application is denied, you must submit an appeal within 60 days after you get a written notice from SSA. To start the appeal process, complete Form SSA-561-U2 Request for Reconsideration. Explain your reasons for seeking reconsideration and submit any additional documentation that will help you make your case to Social Security officials.

The Request for Reconsideration is the first of four possible levels of appeal for Social Security retirement benefits. It is an informal review of your application and in many instances, when new information is submitted or issues are clarified, this level of appeal can lead to a reinstatement or approval of benefits.

When Is The Best Age To Start Receiving Benefits

Are You Eligible for Social Security Benefits as a ...

While the Social Security Administration offers a wide range of information, it does not make recommendations about when you should begin receiving benefits. To make the best decision based on your personal financial situation, consider the following questions:

  • Are you still working? If you plan on applying for Social Security while you are still working, there are limits on how much you can earn each year between age 62 and your FRA and still receive your full Social Security benefits.
  • For example, if you are age 62 and work for the entire year, $1 is deducted from your benefit for every $2 you earn above the annual limit. In 2020, that limit is $18,240. When you reach your FRA, those additional earnings will be used to recalculate your monthly benefit. After you reach your FRA, your earnings do not affect your benefits, regardless of how much you earn.

  • What is your life expectancy? If longevity runs in your family, your retirement time horizon has the potential to be very long, so waiting until age 70 to receive benefits may be beneficial. On the other hand, if your health is poor, you may consider starting your benefits early.
  • Will you still have health insurance? Will your or your spouses employer still provide health insurance coverage after you retire? Most people are not covered by Medicare until age 65, so be sure to plan for your healthcare costs if you decide to retire before then.
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    Can You Earn Money While Collecting Social Security Disability

    Some people who receive disability payments also work while collecting the benefits. However, Social Security has strict guidelines for how much you can earn. For 2019, you cannot earn more than $1,220 per month to be considered disabled. Once you reach this amount, if you’re collecting benefits, they will stop.

    How Are Your Social Security Benefits Calculated

    There are several factors that go into calculating your benefit check, but the determinant factor is how much you earn over your lifetime. They take the highest paid 35 years of your career and average it out. This number, as well as your age, get put into a formula that calculates the amount of your monthly benefit.

    If you do not have 35 years of income, they will offset the missing years with $0 for each year and thus, bring down your overall average. The more years you’re missing, the lower your benefit check will be. If you worked more than 35 years, only the 35 highest paid years are counted to give you the best average.

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    How Does The Calculator Estimate My Pension Payment

    Our simplified estimate is based on two main data points: your age and your average income. Your retirement pension is based on how much youve earned throughout your life from jobs that paid Social Security taxes. Your monthly retirement pension is based on your highest 35-year salary history. You can get your income history from the Social Security Administration .

    Your Social Security benefit also depends on how old you are when you draw it. You can start collecting at age 62, the minimum retirement age, but you get a higher monthly payment if you wait until full retirement age, which is 66 but gradually increases for people born in 1960 or later 67 increased. If you can wait until age 70 to start earning, you will receive your maximum monthly benefit.

    For example, a single person born in 1960 with an average salary of $50,000 would make $1,349 a month by the time they retire at 62 the earliest time to start collecting. The same person would get $1,927 if they waited until age 67, the full retirement age. And he or she would receive $2,389, the maximum benefit on those earnings, if he or she waits until age 70. Payments dont increase if you wait until youre over 70.

    Other factors that affect the amount of your benefit are whether you have worked for state or local government for more than 10 years For example, your Social Security contributions may be reduced if you have paid into the public sector pension scheme.

    What Is Your Full Retirement Age

    Are You Eligible For Social Security Benefits?

    Everyone has an eight-year window during which they can apply for Social Security benefits. The earliest age is 62, and your benefit amount stops rising at age 70. While technically you can wait until after 70 to elect, youd just be turning down free money. Your full retirement age is the age at which youll no longer receive a smaller amount than your primary insurance amount if you choose to elect. For most of the workforce, the full retirement age is 67.

    One important thing to keep in mind is that full retirement age is a bit of a misnomer. While its the age at which the SSA will give you your primary insurance amount, its not the age at which you can receive the highest possible benefit. If you work past your FRA, you can increase your benefit, though they max out at age 70.

    For decades, everyones full retirement age was the same: age 65. Then, in 1983, the SSA made some tweaks to the program because of concerns that the fund would run dry. Because of those tweaks, the full retirement age is now somewhere between age 66 and age 67, depending on the year you were born. You can refer to the table below to determine your FRA:

    A Breakdown of Full Retirement Ages
    Your Birth Year
    67 years old

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    Are There Limits On How Much You Can Earn

    If you choose to continue working while receiving Social Security benefits and you’re not of retirement age, you will be restricted to specific income limits or you run the risk of a reduction in benefits. This reduction, as mentioned above, is not permanent.

    For 2019, you can earn up to $17,640 for the year without being subject to penalty. Should you exceed this amount, you’ll see a reduction in your benefits by $1 for every $2 you earn over the limit. This changes to a $1 reduction for every $3 you earn over the limit when you reach the year in which you’re qualified to retire. Once you hit the retirement month, you’ll no longer be subject to this penalty.

    The circumstances do change if you’re a business owner or self-employed, so if you’re unsure how working while drawing Social Security will affect you in this instance, it’s a good idea to seek the help of a certified financial expert who can help you navigate the complex nature of your benefits.

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