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What Age Can You Start Drawing Social Security Benefits

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Early Benefits Can Still Pay Off

Best age to draw Social Security Benefits!

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, Neiser says.

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.

Spouses And Social Security

You can claim Social Security benefits based on your spouse’s work record. If claiming spousal benefits provides more, claiming before your FRA on a spouse’s record means you’ll lose even more than claiming on your own recordthe benefit reduction for a spouse is up to 35% while the reduction for claiming your own benefit is up to 30%. For instance, if you’re the spouse of Colleen in the above example and you are the same age, you’d be eligible for only $650 a month at age 6235% less than the $1000 a month you would get at your FRA of 67.

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Your decision to take benefits early could outlive you. If you were to die before your spouse, they would be eligible to receive your monthly amount as a survivor benefitif it’s higher than their own amount. But if you take your benefits early, say at age 62 versus waiting until age 70, your spouse’s survivor Social Security benefit could be up to 30% less for the remainder of their lifetime.

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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You Expect Your Investments To Grow Faster Than The Increased Benefit

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.

When You Can First Claim Social Security Payments Depends On The Program And Credits Earned

What Age Can You Start Collecting Social Security

The Social Security Administration oversees the Old-Age, Survivors, and Disability Insurance program, best known for providing retirement benefits to seniors, but as the name indicates, it also provides survivor benefits and disability income.

Each of the three programs has different requirements and number of credits needed in order to claim the monthly income support. Workers can earn up to four credits per year which will determine the level of benefits recipients will receive when they begin to claim. In the case of retirement, you need to earn 40 credits in order to be eligible for benefits upon retirement, but there is a different calculation for survivors and disabled beneficiaries.

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While You Can Start Collecting Benefits At Age 62 Should You Collect Early Or Delay

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For many elderly people, Social Security benefits make up one of their primary sources of income in retirement. For half of seniors, Social Security comprises about half of their retirement income, according to the Center on Budget and Policy Priorities. Some studies estimate that without Social Security, between 30% and 40% of senior citizens would be considered below the poverty line.

The age at which you decide to collect your Social Security benefits has a big impact on how much you’ll earn from the program over time because the longer you wait, the higher your monthly payout will be.

“Don’t just call Social Security and apply at age 62. Everybody has options. A married couple could receive $1 to $1.5 million in benefits over their lifetime. And single people could maybe half of that,” says Marc Kiner, a CPA at Premier Social Security Consulting. “And do not assume that Social Security will review your options with you.”

Select spoke to Kiner and Jim Blair, the lead consultant at Premier, about some of the factors you should consider when deciding when to apply for Social Security benefits.

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Youre Only Working Part Time

If you claim Social Security prior to your full retirement age while still holding down a part-time job, you might have your benefits reduced if your work income exceeds the annual limit. For 2021, if you are under full retirement age, your benefits go down by $1 for every $2 your income exceeds $18,960. If you reach full retirement age in 2021, your benefits go down by $1 for every $3 your income exceeds $50,520 prior to reaching full retirement age. If youre working part-time to help make ends meet, taking Social Security at 62 might make sense.

You Can Find Estimated Benefits Online

When to start drawing Social Security-take it as early as age 62 #socialsecurity #ssdi #62

You can use the SSAs Retirement Benefits Estimator to get an estimate of how much your monthly Social Security benefit will be if you start drawing benefits at age 62, your full retirement age or at age 70.

Want to find out your monthly benefit if you begin drawing benefits at another age between 62 and 70? Use my Social Security Retirement Calculator to find out what your monthly benefit would be at a specific age. The amount shown is an estimate based on your earnings. Once you apply for benefits, the SSA will give you an exact monthly figure.

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What Other Factors Should You Consider When Deciding To Collect Social Security

Before you decide to collect Social Security based on your break even point, you should also consider how collecting early or delaying could impact the benefit your spouse receives.

Since the Social Security formula benefit is based on an individual’s 35 highest earning years, women often collect less in benefits than men because of career breaks during motherhood and overall lower lifetime earnings. However, the Social Security spousal benefit erases some of the disparity in Social Security earnings between men and women.

The spousal benefit is available to all spouses, regardless of whether the spouse has a work history or not . The spousal benefit is 50% of the higher earner’s benefit and in order for a spouse to receive the benefit, the higher-earner must be collecting their own benefit.

The Social Security administration automatically determines whether an individual would earn more in Social Security benefits if they collected on their own work record versus their partner’s work record.

For example, if the higher earner receives a $2,000 monthly benefit, the spouse is eligible to receive up to $1,000, depending on whether they choose to wait until full retirement age, says Kiner. For example, if someone collects the spousal benefit four years before full retirement age, their benefit will be 35% of the higher-earner’s benefits.

How Fra Is Changing If You’re Turning 66 In 2022

Amendments to Social Security in 1983 slowly phased in a change to FRA. As the chart below shows, here is when full retirement age is, based on the year you were born.

Birth Year

Data source: Social Security Administration.

As you can see, if you’ll celebrate your 66th birthday in 2022, your FRA will be 66 and four months — two full months later than it was for people who turned 66 last year and four months after most retirees who came before you.

The result of this change is that if you want your full benefit without any penalties imposed, you’ll have to wait for an extra two months in order to get it. This, unfortunately, is a de facto benefits cut, since you’re faced with either giving up two months of income this year or accepting less in each monthly check going forward.

It also means that if you max out your delayed retirement credits, you’ll still get two fewer months of them versus what retirees in previous years could earn. So the amount you can expand your benefits by waiting to file for them is reduced.

Make sure you’re aware of this big change when you make your decision about when to start Social Security checks — and when calculating how much income your monthly benefits can provide.

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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.

Determining When To Take The Money

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Some advisors offer complicated strategies, youll be better off keeping things simple. When deciding when to start drawing Social Security, consider the following in order:

  • When do you need the money? If you need it now, take itbut for each month youre able to delay, your monthly payment will increase.
  • How long do you expect to live? Are you in good health? Do you come from a long-lived family? The longer you live, the more you stand to gain by delaying payments. The break-even point for people between the ages of 62 and 66 is 84, meaning that if you live longer than 84 years, youll collect more if you wait until after age 66. You might want to claim benefits sooner if you dont think youll live to age 84.
  • If youre married and earn more than your spouse, when you die, your spouse can swap their benefit for your larger one. If you put off taking Social Security until age 70, your spouse will get more when you die. In the interim, they can claim their lower benefits.
  • Although Social Security likely will survive in some form, plan as though Social Security wont be there for youthat is, follow the simple path to wealth of living beneath your means, staying out of debt, saving F-You money, and investing in index funds. If you get Social Security, it will be a bonus.

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    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:

    Your Retirement Age And When You Stop Working

    Your retirement age is the age you begin receiving Social Security retirement benefits. For many people, this is not the same age youll stop working.

    The age you stop working can affect the amount of your Social Security retirement benefits. We base your retirement benefit on your highest 35 years of earnings and the age you start receiving benefits.

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    How Will Working Affect Social Security Benefits

    In a recent survey, 68% of current workers stated they plan to work for pay after retiring.1

    And that possibility raises an interesting question: how will working affect Social Security benefits?

    The answer to that question requires an understanding of three key concepts: full retirement age, the earnings test, and taxable benefits.

    What A Social Security Break

    Is 62 the best age to start drawing Social Security?

    In a nutshell, a Social Security break-even calculator can tell you when the best age is to start taking Social security benefits, in terms of how much money you could expect to receive over time. Going back to the previous example, lets assume that you track your benefit amounts over a 10-year, 20-year and 30-year period. Heres how your total benefits received would look over each of those periods, for all three starting points.

    Your cumulative benefits after 10 years:

    • $144,000, starting at age 62
    • $122,400, starting at age 66
    • $52,800, starting at age 70

    Your cumulative benefits after 20 years:

    • $288,000, starting at age 62
    • $326,400, starting at age 66
    • $316,800, starting at age 70

    Your cumulative benefits after 30 years:

    • $432,000, starting at age 62
    • $530,400, starting at age 66
    • $580,800, starting at age 70

    You can see that youd draw the most Social Security benefits in total if you wait until age 70 to start taking them, assuming you live to age 100. But that could be a big if when youre not in the best health.

    What you have to keep in mind when using a Social Security break-even calculator is that the numbers are hypothetical. They dont take into things that could affect your ability to draw benefits or how far those benefits might go, such as:

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    You Already Have Your 35 Highest

    Your Social Security benefits are based on your earnings in the 35 years that you had the most compensation. If youre in your peak earning years, you could boost your benefits if you keep working a few more years and delaying your benefits. However, if you arent going to increase your average earnings, such as if youre only working part-time or youve had to retire early, you wont miss out on the chance to boost your benefits with higher earning years. However, youll still receive a smaller benefit for not waiting until full retirement age.

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    Sign Up For An Ssa Account

    Signing up for my Social Security account allows you secure access to your Social Security statement, earnings history, and estimated benefits. You can also use the account to check the status of a benefits application, request a replacement Social Security card, and manage benefits once you begin receiving them.

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