Monday, May 16, 2022

What Age Can You Collect Full Social Security

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Theres A Social Security Spousal Benefit

When Can I Retire and Collect Social Security? What’s The Best Age?

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.

No One Else Is Relying On Your Benefits

In the event of your death, a surviving spouse, minor or disabled child can receive money from the Social Security Administration based on the amount of your benefits. For example, a surviving spouse can receive between 71.5% and 100% of your benefit amount, depending on the surviving spouse’s age. A disabled child can receive 75% of your benefits each month even after you’re gone.

If no one else can qualify for benefits based on your record, you might want to retire early because no one is depending on that money. If everything else falls into place and you meet the minimum Social Security retirement age, consider collecting your benefits early and enjoying life.

How Reductionsand Increases In Social Security Benefits Work

The first thing you need tounderstand to make a decision for yourself is at what age do you obtain the SocialSecurity Administrations status for full retirement age. Its pretty simple tofind the answer.

For those born between 1943 and1954, full retirement age is 66. If you were born between 1955 and 1959, addtwo months for every year after 1954 to get to your full retirement age. And ifyou were born in 1960 or later, your full retirement age is 67.

Full retirement age means thepoint at which you will receive the full amount of your Social Securitybenefit. For the purposes of the rest of this article, well assume 67 whentalking about full retirement age .

Your benefit will be reduced orincreased if you file at an age other 67. If you file after full retirement age,your benefit is increased up to 124% , up until age 70.If you file early it will be reduced by an average of 6% for every year before67 that you filed.

We can use an example withdollar amounts to make this more clear. Say your full benefit at 67 is $2,000.That benefit will increase up to $2,480 if you wait until age 70. If you filebefore your full retirement age, however, your benefit could be reduced down toas little as $1,400.

Not including cost of livingadjustments, thats a $1,000 difference per month. Thats a big deal!

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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.

The Right Age To Collect Social Security: 10 Factors You Should Consider

Managing Your Social Security Benefits

Its one of the most popular questions asked aboutclaiming benefits for your retirement: Whats the right age to collect SocialSecurity? Should you file early or late?

This is not aneasy decision to make, or one to take lightly. No matter what your financial situation, youve likely wondered aboutthe best strategy for you.

So today, take a look at the 10 factors you need toconsider when youre thinking about filing for your benefits.

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Will Full Retirement Age Change Again

Though the last legislative change to full retirement age was in 1983, Carroll warns that a future increase in full retirement age is a likely component of a comprehensive Social Security reform package. The culprit for this likely change is our increasing longevity.

More people are living long enough to claim Social Security than in the past, and theyre then spending more years receiving benefits. This makes the program significantly more expensive today than when it was founded, Carroll says. To keep Social Security solvent and provide the same level of benefits, the bar to receive Social Security either needs to rise, taxes have to increase or both.

How Social Security Works

Social Security is meant to supplement your retirement income and ease financial concerns as you get older. Its essentially a support system for Americas elderly, enabled by the 1935 Social Security Act. Most beneficiaries are retirees and their families. However, disabled individuals and survivors of workers who have died are also eligible to collect Social Security benefits.

Workers make Social Security contributions each month, which appear on your paycheck as Federal Insurance Contributions Act taxes. Upon retirement, you can begin to receive Social Security payments, which will continue throughout the rest of your life. How much you receive each month, however, depends on when you elect to begin taking benefits and whether youve reached full retirement age at that point.

Full retirement age is the age at which you become eligible to start receiving full retirement benefits. It was 65 for many years, but the Social Security Administration amended that rule in 1983 because of increases in average life expectancy. Now, depending on the year you were born, you reach full retirement age sometime between 65 and 67. Full retirement age rises gradually from 1938 onward. Anyone born after 1960 reaches full retirement at 67. The Social Security Administration table below breaks down full retirement benefits for different age groups:

Social Security Administration Retirement Benefits
Birth Year
65+2 months for every year after 1937
1943-1954
67

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What Is The Future Of Social Security

If youre skeptical about the future of Social Security or wary of potential changes such as means testingwhich could reduce or eliminate benefits for the wealthy, or an increase in the full retirement ageyou may be tempted to start benefits early, under the assumption that its better to have something than nothing. The 2020 annual report from the Social Security Trustees, released in April, projects that the Social Security Trust Fund has enough resources to cover all promised retirement benefits until 2035, and will cover 79% of scheduled benefits for new retirees thereafter without changing the current system. The 2020 report does not include an adjusted projection due to impacts, if any, from the pandemic.

Over the longer term, changes such as later benefit dates or means testing may be considered.

In any situation, if youre particularly concerned about the future prospects for Social Security, thats a good reason to save more, and earlier, for your retirement.

No More File And Suspend

Social Security: What’s Your Full Retirement Age?

Note that the claiming strategy called file and suspend, which allowed married couples who have reached their FRA to receive spousal benefits and delayed retirement credits at the same time, ended as of May 1, 2016. However, spouses born before Jan. 2, 1954, who have attained their FRA may still be able to file a restricted application. It allows them to claim spousal benefits while delaying their own benefits up to age 70.

Social Security benefits can be taxable if your combined income is high enough.

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Increasing The Eligibility Age For Social Security Pensions

Summary

Social Security faces a long-term financing problem. Many young workers believe the problem is so severe they may never receive a Social Security check. The most logical solution to Social Securitys financing problem is to trim promised benefits and increase payroll taxes moderately. A sensible way to reduce future benefits is to increase the early eligibility age and normal retirement age for retirement pensions. This reform is justified by the substantial increase in life spans that has occurred since Social Security was established in the 1930s. An increase in life spans, when the normal retirement age remains unchanged, is equivalent to a sizable increase in lifetime Social Security benefits.

Increasing the retirement age is unpopular with voters. Unfortunately, so are all other reforms that would restore Social Security to solvency, including tax hikes and cuts in the formula for calculating full pensions.

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 Can Undo A Social Security Claiming Decision

There aren’t many times in life you can take a mulligan. But Social Security offers you the chance for a do-over. Say you claimed your benefit, but soon thereafter wish you had waited to take it. Within the first 12 months of claiming Social Security benefits, you can withdraw the application. You will need to pay back all the benefits you received, including any spousal benefits based on your record. But you can later restart your Social Security benefits at the higher amount youll earn by waiting.

Early claimers have another opportunity for a do-over: They can choose to suspend their Social Security benefit at full retirement age. Say you took your benefit at age 62. Once you turn full retirement age, you can suspend your benefit. You don’t have to pay back what you have received, and your benefit will earn delayed retirement credits of 8% a year. Wait to restart your benefit at age 70, and your monthly payment will get up to a 32% boost — which could erase much of the reduction from claiming early.

Can I Retire At 55 And Collect Social Security

A Foolish Take: Here

Social security retirement benefits are an essential piece of your financial puzzle. These benefits will provide you with monthly income, in addition to income from qualified retirement accounts, taxable investments accounts, or annuities.

Can you retire at 55 to receive Social Security? Unfortunately, the answer is no. The earliest age you can begin receiving Social Security retirement benefits is62. There is a catch. You will reduce your benefit amount if you take Social Security benefits before reaching your new standard retirement age.

You may also have your benefits reduced if you begin taking them after 62 but still work in some capacity. For example, lets say that you are 55 and want to retire from your full-time job and do consult work. You could be eligible for Social Security retirement benefits once you reach 62. However, your earnings from consulting work may affect the amount you receive.

Social security has a flip side. You can get a higher benefit amount if you wait to claim it. For example, if you wait until you turn 70 to claim Social Security, you could receive a monthly payment equal to 132% of your regular benefit amount.

If you are asking yourself, Can I retire at 55? Its essential that you know that Social Security wont be your source of income for the next few years. You should also know that these benefits will be lower if you take them as soon as possible, rather than waiting until you reach full retirement age.

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Tax Implications Of Working While On Social Security

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.

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 Your Social Security Benefits Are Earned

To be eligible for Social Security benefits in retirement, you must earn at least 40 “credits” throughout your career. You can earn as many as four credits a year, so it takes 10 years of work to qualify for Social Security.

In 2021, you must earn $1,470 to get one Social Security work credit and $5,880 to get the maximum four credits for the year.

Claiming Social Security At Age 65

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

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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Earliest Normal Social Security Eligibility Age: 62

Even though you can begin receiving benefits as early as 62, that doesn’t mean you should start taking them at that age. This is primarily because you will receive reduced benefits. If you want a larger amount of guaranteed income later in retirement, then waiting to begin benefits until you are a few years older will make sense. Remember, even if you are retired, you can wait until you’re 70 to apply for Social Security so that you get a higher benefit. It is one of the best ways to make sure you have a higher amount of inflation-adjusted income later in life.

Also, if you take Social Security at this early age and you have earnings above the Social Security earnings limit, your Social Security benefits will be reduced. Once you reach full retirement age , there is no reduction in benefits for continuing to work, no matter how much you make.

You can apply for Social Security retirement benefits any time after you reach 62. Once you reach 62, think of it like open enrollment you can begin at any time and do not have to wait until another age cut off.

What Else Affects Your Retirement Benefits

Everyones retirement is unique. Beyond deciding when to begin receiving retirement benefits, other factors that can affect your benefits include whether you continue to work, what type of job you had, and if you have a pension from certain jobs.

Continuing To Work

You can choose to keep working beyond your full retirement age. If you do, you can increase your future Social Security benefits. Each extra year you work adds another year of earnings to your Social Security record. Higher lifetime earnings can mean higher benefits when you choose to receive benefits.

Specific Types Of Earnings

While Social Security earnings are calculated the same way for most American workers, there are some types of earnings that have additional rules.

Earning types with special rules include:

Pensions And Other Factors

Pensions and taxes have the potential to impact your retirement benefit. Review the resources below on pensions and other factors you should consider:

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