Thursday, May 19, 2022

What Age Can I Take Social Security

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Timing And Your Health Coverage

What Age Should I Take Social Security?

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.

You Can Claim Social Security Benefits Earned By Your Ex

Just because you’re divorced doesn’t mean you’ve lost the ability to get a Social Security benefit based on your former spouse’s earnings record. You can receive a benefit based on his or her record instead of a benefit based on your own work record if you were married at least 10 years, you are 62 or older, and single.

Like a regular spousal benefit, you can get up to 50% of an ex-spouse’s benefit — less if you claim before full retirement age. And the beauty of it is that your ex never needs to know because you apply for the benefit directly through the Social Security Administration. Taking a benefit on your ex’s record has no effect on his or her benefit or the benefit of your ex’s new spouse. And unlike a regular spousal benefit, if your ex qualifies for benefits but has yet to apply, you can still take a benefit on the ex’s record if you have been divorced for at least two years.

Note: Ex-spouses can also take a survivor benefit if their ex has died after the divorce, and, like any survivor benefit, it will be worth up to 100% of what the ex-spouse received. If you remarry after age 60, you are still eligible for the survivor benefit.

A claiming strategy if youre divorced: Exes at full retirement age who were born on January 1, 1954, or earlier can apply to restrict their application to a spousal benefit while letting their own benefit grow.

Early Benefits Can Still Pay Off

However, taking early benefits can still pay off despite the reduced monthly check. But youll want to be sure you budget for a reduced benefit.

No one can predict how long youll live, but if youre facing a potentially significant reduction in life expectancy and are short of income, taking Social Security early may be appropriate, says Neiser.

Married women are also good candidates for claiming early benefits because they are likely to outlive their husbands. Those widows then become eligible to receive the greater of either their benefit or their late husbands benefit.

However, this scenario works only if the husband does not claim his benefits early. By not claiming early benefits, the husband effectively increases the monthly benefit his wife eventually receives. So youll want to calculate how filing early will affect your spousal benefit here.

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How Current Claiming Rules Work

Current Social Security rules allow workers to claim retirement benefits starting at age 62, or what’s known as the early eligibility age. Those payments are reduced in exchange for claiming early.

Workers get their full benefits if they wait until their full retirement age.

For those who become eligible for retirement benefits in 2021, that age is 66 years and 10 months.

Workers with a full retirement age of 66 get a 32% increase to their monthly benefits if they wait until 70, while those with a full retirement age of 67 stand to get a 24% increase if they hold out that long.

Yet many still claim early, despite the incentive to wait until full retirement age or later.

In 2019, 32.6% of newly retired beneficiaries were 62, the largest group of first-time claimants. That was followed by 25.3% who were 66 and 12.6% who were 65. Just 7.4% were age 70 or older.

You Have A Long Life Expectancy

When to Take Social Security Retirement Benefits

This one goes without saying. While you never know when youll stay or when youll go, actuarial tables can offer you a clue .

In Social Security planning, life expectancy is a crucial factor, says Lyle Solomon, Principal Attorney at Oak View Law Group in Rocklin, California. Of course, no one can determine how long they might live, but according to the most recent numbers from the Centers for Disease Control and Prevention, the average American who lives to be 65 can expect to live for another 19 years.

Its well known that, by starting Social Security later, the cumulative dollars of that higher benefit will eventually catch up to and surpass the smaller benefit earned from claiming Social Security earlier.

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What To Consider When Deciding The Best Age For Social Security Benefits

Youll receive reduced monthly benefits permanently if you start taking them before you reach full retirement age. And the reductions arent small. This breakdown summarizes how much you can lose depending on when you get your retirement benefits:

  • Benefits are reduced by 30% if you opt to start receiving benefits just five years early.
  • If you wait until you full retirement age youll receive 100% of your benefits.
  • You can also elect to postpone benefits beyond full retirement age, up until you are 70.
  • The monthly amount you will receive in the future increases each month you wait to start receiving benefits.
  • If you can wait until the last possible month, your check will be 132% of the full retirement benefit.

For a fuller comparison, this table from the Social Security Administration shows how much you could get if you retire at age 62 based on your birth year:

Social Security Administration Early Retirement at Age 62
Birth Year
30%$700

So, its almost always best to delay Social Security benefits for as long as you can. If you plan to work in retirement, youll definitely want to delay. Youll face a penalty if you continue to work after you claim early retirement benefits and earn more than the yearly earnings limit, which for 2020 is $18,960. This means that the Social Security Administration will deduct $1 from benefits for every $2 that you earned over $18,960.

Social Security Work Penalties Determined By Your Age

There are no penalties for receiving Social Security and working at the same time if you have reached your full retirement age. After your full retirement age, you can earn as much money as you like without incurring any penalties.

Your full retirement age is determined by your birthday. For reference: If you were born between 1943 and 1954, then your full retirement age is 66. If you were born in 1960 or after, then your full retirement age is 67.

It is important to note that the rules described here are for Social Security retirement benefits. There are different rules for disability or supplemental security income payments.

For more information, you can consult the Social Security Administrations Retirement Benefits Planner website.

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Social Security Is A Critical Source Of Retirement Income

Some have the perception that Social Security is of secondary or even tertiary importance in retirement. But according to a recent report, Social Security represents a major source of income for 64% of retirees.1

Keep in mind that Social Security makes annual cost-of-living adjustments based on the Consumer Price Index, and under current laws, pays income for life and the life of your spouse.2

How A Social Security Break

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

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.

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Claiming Social Security At Age 62

At age 62, the earliest point at which most people can claim benefits, youll receive around 70 percent of the amount that you would receive at your Full Retirement Age. If you were born in 1958, and your full benefit at retirement would be $1,000 a month, you would shrink your benefit to around $700 a month by retiring at age 62. Under most circumstances, once you claim your benefit, it stays at that amount for the rest of your life. Consequently, by retiring early you could lose out on $300 a month every month for the rest of your life.

After you turn 62, the amount of your Social Security benefit rises by about a half a percentage point each month. So, at age 63 you would receive about 77 percent of your benefit

If you work after claiming your benefit, one of two things can happen:

  • If you earn less than the earnings limit, which for 2020 is $18,240, then your benefits will not be affected.
  • If you earn more than the earnings limit, Social Security will deduct $1 for each $2 you earn over the limit. Social Security will, after full retirement, adjust your benefit to reflect this deduction so the money will eventually be restored to you.

Full Retirement Age: Age 6567 Depending On Date Of Birth

Your full retirement age is determined by your day and year of birth, and it is the age in which you get your full amount of Social Security benefits. For every year you delay taking your benefits from full retirement age up until you turn 70, your benefit amount will increase by almost 8% a year. It is referred to as a delayed retirement credit. This increase can result in more lifetime income for you and your spouse. Even after factoring in a potential return on investment and the monthly benefits you could have received if you claimed early, there can still be a $50,000$100,000 increase in lifetime benefits by waiting until you are older.

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You’re In Poor Health

Retirement can last 20 or 30 years if you’re a healthy senior, but unfortunately, many people develop illnesses as they age. That’s why planning for healthcare costs in retirement is so important.

If you’re in poor health, you may need the extra money that Social Security benefits provideand opt to claim benefits early. And, sadly, if you think you may not live to be very old, you could come out ahead on a lifetime basis.

This strategy could backfire if you have a spouse. If you start collecting early, it will lower your monthly benefit. But it will also lower any survivor benefits your spouse is entitled to after you pass. If your spouse outlives you for many years, this could be a serious financial hit.

Gaining Back The Reduction In Benefits From Working

Changes Ahead For Social Security?

The amounts of early retirement benefits you lose as a setoff against your earnings are not necessarily gone forever. When you reach full retirement age, Social Security will recalculate upward the amount of your benefits to take into account the amounts you lost because of the earned income rule. The lost amounts will be made up only partially, however, a little bit each year. It will take up to 15 years to completely recoup your lost benefits. And remember, none of this readjustment will change the permanent percentage reduction in your benefits that was calculated when you claimed early retirement benefits .

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    What Is Full Retirement Age

    In addition to how much youve earned over the years, the size of your monthly Social Security benefit depends on when you were born and the age when you start claimingdown to the month.

    Youll receive your full monthly benefit if you start claiming when you reach what Social Security considers your full retirement age , sometimes also referred to as normal retirement age. FRA was 65 when Social Security began, but it has been raised to 67 for anyone born in 1960 or later. To find your FRA, see the chart below.

    Finding Your Full Retirement Age

    If You’re Not Sure Why You Received A Payment

    Contact the authorizing agency directly to find out why they sent the payment. You may be able to find the authorizing agency in the memo line of the check. View this diagram of a sample Treasury check to help you locate the authorizing agency contact information on your own check. Scroll about half way down the page to see the diagram.

    If you’re unable to find which agency authorized the payment, . They can help you determine which government agency you need to contact. To find which RFC you need to call, look for its city and state at the top center of the check.

    Use the Treasury Check Verification System to verify that the check is legitmate and issued by the government.

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    Youre Not Planning To Work

    Taking Social Security while working before full retirement age will reduce your monthly benefit if your salary exceeds certain limits. In 2022, Social Security will reduce your benefit by $1 for every $2 you earn above $19,560. The year you reach full retirement age, the annual limit is $51,960 and Social Security will only withhold $1 for every $3 you earn above this amount. Once you reach your full retirement age, you dont have to worry about a reduced benefit.

    But youre not permanently giving up that money. When you hit normal retirement age, Social Security will recalculate your benefit at a higher amount to give you credit for the withheld funds. However, this temporary reduction often makes it so that taking Social Security early when youre still employed isnt worth your while.

    Theres A Social Security Spousal Benefit

    Can You Take Social Security at 62 and Still Work Retirement Question

    Marriage brings couples an advantage when it comes to Social Security. Namely, one spouse can take what’s called a spousal benefit, worth up to 50% of the other spouse’s Social Security benefit. Put simply, if your monthly Social Security benefit is worth $2,000 but your spouse’s own benefit is only worth $500, your spouse can collect a spousal benefit worth $1,000 — bringing in $500 more in income per month. Just as the benefit based on your own work history is reduced if you claim it early, the same is true for a spousal benefit. That 50% figure is the maximum amount that only a spouse who is at least full retirement age is eligible for. Taking the spousal benefit early at, say, age 62, reduces the amount to as little as 32.5% of the higher earners benefit. If you take your own benefit early and then later switch to a spousal benefit, your spousal benefit will still be reduced.

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    How Claiming Social Security Early Works

    If youre claiming Social Security based on your own record or youre taking spousal benefits, you can start benefits as early as age 62. If youre a surviving spouse, you can begin receiving benefits at 60. However, by taking benefits earlier, youll face a lifetime benefit reduction.

    Your Social Security benefit is based on your primary insurance amount. Thats the amount youd receive if you started your benefits at full retirement age. If you were born in 1960 or later, your full retirement age is 67. Full retirement age ranges from age 66 for those born in 1943 to age 66 and 10 months if you were born in 1959.

    Any time you take Social Security before your full retirement age, youll have to accept a reduced benefit. Your benefit will be 6.66% lower for each year of early benefits. If you start them at that earliest eligible age of 62, your benefits will be 30% lower than theyll be if you wait until you reach normal retirement age.

    However, if you can hold out past full retirement age, youll earn delayed retirement credits. These amount to 8% per year until your Social Security benefits cap out at age 70. Waiting until age 70 results in a monthly benefit thats 77% higher compared to if you started at age 62.

    Pro Tip

    If youre claiming spousal benefits, you wont be able to earn delayed retirement credits. Your benefit will max out at your full retirement age.

    Maximum Social Security Benefit in 2022

    Starting Age

    $4,194

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