Thursday, June 16, 2022

What Age Can I Start Getting Social Security

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Can I Get Medicare Without Social Security

When Can I Start Collecting My Social Security

Did you know that you do not have to be receiving a Social Security payment to enroll in Medicare?

It is easy to get confused because they often do go together. However, it is not necessary. In this blog, we will take a look at how and when Social Security and Medicare go together as well as how and when they dont. Plus we will give you an idea of what that might mean to you.

Claiming Social Security Benefits At The Right Time Means More Money In Your Pocket Here’s A Guide To Everything From Knowing Your Full Retirement Age To Taking Social Security Spousal Benefits

For many Americans, Social Security benefits are the bedrock of retirement income so maximizing this stream of income is critical.

The rules for claiming Social Security benefits can be complex, but this guide will help you successfully navigate the details. Educating yourself can ensure that you claim the maximum amount to which you are entitled.

Here are 12 essential details you need to know.

Doing A Breakeven Analysis And Other Ways To Decide How Soon To Start

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        If youre about to retire, you may be wondering whether you should start claiming your hard-earned Social Security benefits now. Here are a few key factors to consider in making that decision.

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        How Does Working After Retirement Affect Your Benefits

        Working after retirement is becoming more and more common. The average recipient of Social Security retirement benefits is only receiving $1,543 per month. One can quickly see why it often becomes necessary to continue working even when receiving benefits. Some people might continue to work their normal job when they choose to start receiving benefits. Others might decide to return to work at a part-time job. So, how does working affect the benefits that you will receive?

        The main thing to understand here is that your benefits can be affected by earning additional income, particularly if you have not reached full retirement age. Those who choose to start their benefits early might not receive their full benefits if they are still working. In 2021, the Social Security earnings limit is $18,960 to still receive full benefits. This means that if you earn more than this amount from another source like a part-time job, then your benefits will be reduced. Your benefits will be reduced by $1 for every $2 that you earn above the limit.

        Tax Implications Of Working While On Social Security

        Important retirement ages in the U.S.

        Not only can working while receiving benefits lower the amount of your Social Security check, but it can also have tax implications as well. Remember that whether or not your Social Security benefits are taxable depends on your income level. All your income factors into this as well not just income from working a job. So, any income that you receive from annuities or other investments counts toward the total. You might find yourself in a situation where your benefits are reduced and up to 85% of them might become taxable as well. Most retirees want to maximize their income, so you should wait until full retirement age to start receiving your benefits if at all possible. While your benefits might still be taxable based on your personal finances, you would no longer have to worry about a reduction in benefits because of other income.

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        Social Security And Working: You Will Always Pay Social Security Taxes

        No matter your full retirement age and whether or not you are paying work penalties or not, if you are working, you will continue to pay Social Security taxes on your earnings.

        The good news here is that your additional earnings could potentially increase your Social Security benefit amount. Social Security will check your record every year and will notify you if you have achieved a higher benefit amount.

        Full Retirement Age Affects The Amount Of Your Benefits And More

        Full retirement age is the age at which you can claim your standard Social Security benefit, or your primary insurance amount , from Social Security. Your PIA is the standard amount you can expect to receive based on your inflation-adjusted average wages earned throughout your career. Full retirement age is 66 for those born in 1954 and 67 for those born in 1960 or later — it varies depending on your birth year.

        It is important to know your full retirement age, as it affects when you can claim Social Security without reducing your benefits, the amount of delayed retirement credits you can earn in order to raise your benefits, and how much you can earn from working while receiving Social Security without forfeiting any of your benefits.

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        You Want To Start A Business

        Some people think of retirement as a time to relax, but you might see it as an opportunity to do things you couldnt do before, such as starting your own business. For example, you might have put off starting a business before because you were afraid you wouldnt be generating enough income. Social Security benefits could provide enough income to let you launch your business. And if your business is successful, the income it generates could be more than enough to offset the future reduction in benefits.

        A Quick Note About Life Expectancy: According To The Social Security Administration Average Life Expectancy For A 65

        At what age can I start collecting Social Security benefits?

        Your spouse: If you are married, you can explore additional strategies to maximize the benefits you receive collectively. Start by taking your spouse’s age, health, and benefits into account, particularly if you’re the higher-earning spouse. The amount of survivor benefits for a lower-earning spouse could depend on the deceased, higher-earning spouse’s benefitthe bigger the higher-earning spouse’s benefit, the bigger the benefit for the surviving spouse.

        Whether you’re still working. Earning a wage can reduce your benefit temporarily if you take Social Security early. If you’re still working and you haven’t reached your full retirement age, $1 in benefits will be deducted for every $2 you earn above the annual limit .

        In the year you reach your full retirement age, the reduction falls to $1 in benefits deducted for every $3 you earn above a higher limit . However, starting the month you hit your full retirement age, your benefits are no longer reduced no matter how much you earn.

        Again, any reduction in benefits due to the earnings test is only temporary. You receive the money back in the form of a recalculated higher benefit beginning at full retirement age, so don’t use the reduction as the sole reason to cut back on working or worrying about earning too much.

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        The Upside Of Filing At 62

        Claiming Social Security at 62 means subjecting yourself to the maximum reduction in benefits you can face. If your FRA is 66, filing at 62 will constitute a 25% hit to your benefits. If your FRA is 67, signing up at 62 will leave you with a benefit that’s 30% lower. But despite the hit you might face initially, claiming Social Security at 62 makes sense for one big reason: You’re not betting on your own longevity.

        Social Security is actually designed to pay you the same lifetime total regardless of when you first start collecting benefits. Signing up at age 62 will shrink your payments on a monthly basis, but you’ll also get a larger number of individual payments. Meanwhile, filing at FRA or later will give you more money from Social Security each month, but fewer payments. You should break even in your lifetime if you wind up living an average life expectancy. But what if you don’t?

        Without a crystal ball, it’s impossible to predict your own life span. While you may end up living well into your 80s or beyond, health issues might creep up in your late 60s or early 70s that shorten your life expectancy tremendously. The benefit of signing up for Social Security at 62 is that you get your money as soon as you’re eligible, and you’re not taking on the financial risk of dying at a relatively young age.

        What If I Take Benefits Early

        If you choose to receive your Social Security check up to 36 months before your full retirement age, be aware that your benefit is permanently reduced by five-ninths of 1% for each month.

        If you start more than 36 months before your full retirement age, the benefit is further reduced by five-twelfths of 1% per month, for the rest of retirement.

        For example, let’s assume that you stop working at age 62. If your full retirement age is 66 and 2 months you elect to start benefits at age 62, the reduced benefit calculation is based on 50 months. This means that the reduction for the first 36 months is 20% and 5.83% for the remaining 14 months. Overall, your benefits would be permanently reduced by 25.83%.

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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.

        When To Apply For Social Security

        What Age Can You Start Collecting Social Security

        As stated above, you are eligible to apply for Social Security retirement benefits when you are 61 and nine months. You can start collecting benefits as soon as you turn 62.

        However, just because you can, does not mean that you should.

        The longer you delay starting your benefits, the more your monthly income will be. In fact, the difference in lifetime income between starting at age 62 and waiting until your maximum retirement age can be more than $100,000 and for many people much much more.

        While you can start benefits at age 62, the Social Security Administration considers that early. Depending on your birth year, you do not reach what the SSA calls full retirement age until sometime between ages 66 and 67.

        • For every month prior to your full retirement age that you begin taking benefits, around 0.55% is deducted from your payout.
        • And, for every year that you defer your benefits, you will receive a larger amount when you finally do begin drawing Social Security. The amount of the bonus is dependent, once more, on your birth date. For example, someone born in 1944 has a full retirement age of 66. If they start benefits at age 69, they will receive eight percent more benefits for each year they delay.

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        Children Can Also Collect Social Security Benefits

        Minor children of Social Security beneficiaries can be eligible for benefits. Children up to age 18 and disabled children older than 18 may be able to receive up to half of a parent’s Social Security benefit. The disability must have occurred before the age of 22. The adult child can continue collecting the benefit even after the parent has died, as long as the disability prevents them from working.

        How Much Social Security Will I Get At Age 63 Benefits Explained

        Social Security benefit payments are released monthly to recipients. The amount of payment you receive depends on several factors including your age. How much social security will you get at age 63?

        The Social Security benefits program started in 1935. People contribute to the program during their working years and receive the benefits in retirement. For people born between 1943 and 1954, the full retirement age is 66 years old. The full retirement age is 67 years for those born in 1960 or later. The size of your monthly payment will be reduced if you start collecting the benefits early.

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        To Wait Or Not To Wait

        • Consider taking benefits earlier if
        • Consider waiting to take benefits if
        • Consider taking benefits earlier if You are no longer working and can’t make ends meet without your benefits.
        • Consider waiting to take benefits if You are still working and make enough to impact the taxability of your benefits.
        • Consider taking benefits earlier if You are in poor health and don’t expect the surviving member of the household to make it to average life expectancy.
        • Consider waiting to take benefits if You are in good health and expect to exceed average life expectancy.
        • Consider taking benefits earlier if You are the lower-earning spouse and your higher-earning spouse can wait to file for a higher benefit.
        • Consider waiting to take benefits if You are the higher-earning spouse and want to be sure your surviving spouse receives the highest possible benefit.

        Income Limits For Social Security Retirement Benefits

        What is the Best Age to Start Social Security Benefits?

        Many people ask, How much can you earn in 2021 and draw Social Security? The annual limit for 2021 is $18,960 for those who have not reached full retirement age. So, suppose that you begin receiving benefit payments at age 62. This special rule states that you can have no more than $18,960 in annual earnings or else your benefits will be reduced. Keep in mind that the earnings limit only applies to money earned from work. It does not include earnings from investments like an IRA or capital gains. However, if a spouse or child receives benefits based on your work record, their benefits will be reduced as a result of your earnings as well.

        If you claim benefits and have been working for the entire year, then it might be a good idea to check out the SSAs earnings test calculator. You should know that it is your responsibility to notify the Social Security Administration of your earnings. Failure to notify SSA might mean that your benefits do not get appropriately reduced, especially in your first year of working. You might continue receiving your full monthly checks, and then you will be forced to repay those extra benefits when you file your income taxes. You might even owe some additional fines and penalties as well. Be sure that you are aware of these rules when it comes to allowable monthly income so that you do not find yourself in this situation.

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        Can You Work And Collect Social Security Yes With Limits

        As simple words go, retirement carries a lot of weight and a lot of baggage.

        Now that retirement is bouncing around in your mind, and you entertain the thought of giving up your day job, you ask yourself:

        • Is my retirement income and Social Security going to be enough for my preferred lifestyle?

        • What am I going to do with myself every day?

        One answer responds to both questions. You can retire, collect Social Security, still work and be productive. The trick is theres a limit to how much you can make depending on your age.

        If you are at what Social Security deems full retirement age, you can collect and keep your full Social Security benefits and make as much money as you want.

        If you are not yet at full retirement age but are receiving Social Security benefits, you can make up to $18,960 a year without penalty. Thats $1,580 a month, or $364 a week. We get into more details later in this post of what happens when you go over that amount.

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        You Have A Shorter Life Expectancy

        The government incentivizes waiting to collect your Social Security benefits by giving you a larger monthly amount the longer you delay. For example, if you start collecting benefits at age 62 when your full retirement age is 66, your monthly benefit will be about 75% of your full-age benefit. So if you expected your monthly benefit to be $1,000 per month at 66, you would only receive around $750 at 62.

        Although a larger monthly benefit might sound great, keep in mind that youd have to wait four years to get that extra $250 per month. You would receive $36,000 during those four years at the reduced amount of $750 per month.

        When you start collecting $1,000 at age 66, that extra $250 per month wont let you break even for 12 years compared to collecting early. If your health is declining and you dont expect to live until youre 78, youll receive more in benefits during your lifetime if you start claiming as soon as possible.

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