When Should You Start Social Security
The Social Security Administration does not have a recommended age to start receiving benefits. The decision is entirely up to you. Youll get a little bit less if you start early, or a bigger benefit if you wait until 70. You can calculate the difference on the SSA website. You may receive a bigger payout over your lifetime if you wait, but that might not be as important as receiving income now, especially if you can no longer work for health reasons. Ultimately, the right age depends on your financial situation, your work, and your health.
Are Social Security Benefits Taxable At Full Retirement Age
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.
What Will Your Retirement Benefit Be
Your Social Security retirement benefit is based on the number of years you’ve been working and the amount you’ve earned. Your benefit is calculated using a formula that takes into account your 35 highest earnings years. If you earned little or nothing in several of those years , it may be to your advantage to work as long as possible, because you’ll have the opportunity to replace a year of lower earnings with a higher one, potentially resulting in a higher retirement benefit.
If you begin collecting retirement benefits at age 62, each monthly benefit check will be 25% to 30% less than it would be at full retirement age. The exact amount of the reduction will depend on the year you were born.
However, even though your monthly benefit will be 25% to 30% less if you begin collecting retirement benefits at age 62, you might receive the same or more total lifetime Social Security benefits as you would have had you waited until full retirement age to start collecting benefits. That’s because even though you’ll receive less money per month, you might receive more benefit checks.
The following chart shows how much an estimated $1,000 monthly benefit at full retirement age would be worth if you started taking a reduced benefit at age 62.
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.
The Best Way To Avoid The Earnings Limit
The best way to avoid the earnings limit is to wait until you reach FRA to begin your benefits. Understandably, some people have no choice and must start benefits because they are laid off and they have no other income or assets. If this happens to you but your situation changes and you go back to work, you can withdraw your application for Social Security within 12 months of starting benefits.
Other people, however, do have a choice perhaps they could use some of their savings or retirement money to tide them over until they reach FRA. That may be a better option than starting Social Security early.
Amount Of Survivors Benefits
The amount of a surviving spouse’s monthly Social Security check will depend on the earnings record of the deceased spouse. The surviving spouse will receive a percentage of the monthly amount the deceased spouse received if he or she was collecting SSDI at the time of death, or would have received if he or she had started to collect benefits. Here are the general rules:
- A surviving spouse who is 66 or 67 will receive 100% of the deceased worker’s monthly amount.
- A surviving spouse who is between age 60 and full retirement age will receive 71-99% percent of the deceased worker’s monthly amount.
- A surviving spouse who is receiving a mother’s or father’s benefit will receive 75% percent of the deceased worker’s monthly amount.
However, if the deceased worker’s children are collecting SSDI benefits at the same time, the surviving spouse’s benefit might be reduced. The total of the spouse’s benefit and the children’s benefit cannot be greater than the maximum family benefit, which is generally 150% to 180% of the deceased worker’s monthly SSDI benefit.
Note that the benefits paid to a divorced spouse based on being over 60 or disabled are not counted toward the maximum family benefit and won’t affect a current spouse’s or child’s benefits. However, benefits paid to a divorced spouse who is collecting a mother’s or father’s benefit are counted toward the maximum family benefit.
A Divorced Spouse May Be Eligible For Benefits
If you are divorced, you may qualify for Social Security benefits based on your ex-spouses work record. To be eligible for benefits, your ex-spouse must have reached the age at which they are eligible to begin receiving benefits .10
To qualify, you need to:
- have been married to your ex-spouse for at least 10 years
- have been divorced two years or longer
- be at least 62 years old
- be unmarried and
- not be entitled to a higher Social Security benefit based on your own work history.
If your former spouse is deceased, you may still receive benefits as a surviving divorced spouse , assuming that your ex-spouse was entitled to Social Security benefits, your marriage was at least 10 years, you are at least 60 years old, and you are not entitled to a higher benefit amount based on your own work history. If you remarry before the age of 60, you will lose the ability to receive a survivor benefit from your deceased ex-spouse.10
If your former spouse is living, the maximum amount that you are eligible to receive is 50% of what your former spouse is due at full retirement age. To receive the maximum benefit, you will need to wait until you have reached your own full retirement age.10
Your benefits are unaffected should your former spouse elect to take Social Security before reaching full retirement age or if your ex-spouse starts a new family.10
Recommended Reading: Can You Look Up Someone By Their Social Security Number
Costs Of The Solution
Two issues that are likely to arise in any discussion of fixing this problem are its cost to the Social Security trust fund and its cost to the federal budget. With regard to the cost to the Social Security trust fund, there are three ways to look at the issue.
One way is to view the cost relative to costs in a world in which no pandemic had occurred. For example, the cost could be measured using the economic assumptions in the most recent Social Security trustees report , which were formulated before the pandemic began. From this perspective, the cost would be zero because the legislative change would restore the world of Social Security benefits to what it would have looked like had there been no pandemic.
A second way of looking at the issue is to view the cost of the change relative to costs in a world that reflected economic assumptions indicative of the economic recession caused by the pandemic. From this viewpoint, there would be a cost associated with fixing the problem. For example, the chief actuary of the SSA estimates that if the AWI in 2020 were to fall 5.9 percent below its 2019 level, the AWI adjustments proposed by Chairman Larson would cost $90 billion in present-value dollars for the 75-year period from 2020 through 2094about 0.02 percent of taxable payroll over that period. . The cost over the 10-year period from 2020 to 2029 would be about $21 billion in nominal dollars.
How Do You Apply For Social Security Benefits
If you are eligible for Social Security benefits, you can apply online, by phone or by appointment at a local Social Security office.
How to Apply for Social Security Benefits
- Applying online is the easiest way to apply for Social Security benefits. The Social Security website allows you to apply for retirement, spouses, Medicare and disability benefits at the same site. You can also apply for Supplemental Security Income benefits.
- If you dont have Internet access, you can sign up by phone. You can call the Social Security Administration at 1-800-772-1213 .
- The Social Security Administration has restrictions on office visits during the COVID-19 pandemic. It does allow in-person visits for certain services. You should check with the SSAs Coronavirus page to see if you can make an in-person appointment at your local office.
Also Check: Social Security T
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 you’re 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 aren’t going to increase your average earnings, such as if you’re only working part-time or you’ve had to retire early, you won’t miss out on the chance to boost your benefits with higher earning years. However, you’ll still receive a smaller benefit for not waiting until full retirement age.
How To Receive Federal Benefits
To begin receiving your federal benefits, like Social Security or veterans benefits, you must sign up for electronic payments with direct deposit.
If You Have a Bank or Credit Union Account:
If You Dont have a Bank or Credit Union Account:
- Direct Express debit card – a pre-paid debit card. Get help by calling the Go Direct Helpline at .
Make Changes to an Existing Direct Deposit Account:
What If I Change My Mind
If you receive Social Security benefits at a reduced rate, but then change your mind, you have the option of withdrawing your application and paying back to the government what you’ve already received . Then, you could restart benefits at a later date to take advantage of a higher payout. But you are limited to one withdrawal per lifetime.
For example, let’s say you elected to receive early benefits at age 62, but then decided to go back to work at age 63. You could withdraw your Social Security application within the first 12 months of receiving benefits, pay back the years worth of benefits you received, go back to work, and then wait until a later age to restart your benefit checks at a higher level.
For important details about repaying benefits please read the SSA publication If You Change Your Mind.
Can A Divorced Woman Who Was Married For More Than 10 Years Claim A Spousal Benefit On Her Ex
Not any longer. The government eliminated a strategy that allowed a spouse or a divorced spouse to use a restricted application to file for a spousal benefit while letting her own retirement benefit grow. Now only people born before 1954 can do this.
Instead, when a spouse or divorced spouse files for benefits, the government will give her all the benefits she is eligible for whether it is her retirement benefit or a spousal benefit, said William Reichenstein, a principal of Social Security Solutions, a company that helps individuals maximize their lifetime income.
A divorced spouse can file for a spousal benefit even if the ex-spouse has not yet claimed a benefit as long as both are at least 62 and are divorced for more than two years. A married spouse must wait until her spouse has filed.
But if the ex-spouse dies, the picture changes. The surviving ex-spouse can claim a survivor benefit as early as 60 and allow her retirement benefit to grow until as late as 70. Or she can claim her reduced retirement benefit early and then switch to a higher survivor benefit at full retirement age.
If you were married for 10 years, keep tabs on the ex, Ms. Floyd said. Once he dies, that survivor benefit could be higher than your own.
You May Like: 154 Pierrepont Street Sixth Floor Brooklyn Ny 11201
Your Social Security Benefits Will Be Taxed
Most people know that you pay tax into the Social Security Trust Fund throughout your career, but did you know that you may also have to pay tax on your Social Security benefits once you start receiving them? Benefits lost their tax-free status in 1984, and the income thresholds for triggering tax on benefits haven’t been increased since then.
As a result, it doesn’t take a lot of income for your Social Security benefits to be pinched by Uncle Sam. For example, a married couple with a combined income of more than $32,000 may have to pay income tax on up to 50% of their Social Security benefits. Higher earners may have to pay income tax on up to 85% of their benefits.
You may also have to pay state income taxes on your Social Security benefits. See our list of the 13 States That Tax Social Security Benefits.
Taxes On Your Benefits
Your Social Security benefits may be partially taxable if your combined income exceeds certain thresholds. Regardless of how much you make, the first 15% of your benefits are not taxed.
The SSA defines combined income using this formula:
- Your adjusted gross income + nontaxable interest + half of your Social Security benefits = your combined income
If you file your federal tax return as an individual and your combined income is $25,000 to $34,000, then you may have to pay income tax on up to 50% of your benefits. If your combined income is more than $34,000, then you may have to pay tax on up to 85% of your benefits.
If youre married, filing a joint return, and your combined income is $32,000 to $44,000, then you may have to pay income tax on up to 50% of your benefits. If your combined income is more than $44,000, then you may have to pay tax on up to 85% of your benefits.
Also Check: Update Address With Social Security
The Second Best Choice
Single Social Security claimants who want to hold off until age 70, but find they cant quite wait any longer should select age 69 for the best trade off, according to Christopher Jones, chief investment officer at Edelman Financial Engines.
That sacrifice may be as little as a few thousand extra dollars in additional lifetime benefits in exchange for starting a year earlier, according to Jones.
If youre single, well tell you you should wait until 70, Jones said. It is generally preferable to do so.
“But its not quite as critical as it is going from 66 to 67, or 67 to 68.
In a low interest rate environment, it’s hard to beat the potential increases for every year you delay claiming your benefits, Jones said.
Thats a guaranteed real rate of return backed by the federal government, Jones said. You cant get real rates of return at 6% to 8% right now not even close in the marketplace.
If You Have Lived In Canada Less Than 40 Years
Not everyone receives the full Old Age Security pension. The amount you receive depends on the number of years you have lived in Canada.
If you lived in Canada for less than 40 years you will receive a partial payment amount. Your payment amount is based on the number of years in Canada divided by 40.
You can delay your first payment up to 5 years to get a higher amount.
If you lived in Canada for 20 years
If you lived in Canada for 20 years after age 18, you would receive a payment equal to 20 divided by 40, or 50%, of the full Old Age Security pension.
Also Check: How To Set Up Appointment With Social Security
When Older People Are Eligible For Medicare
Older people can qualify for traditional Medicare coverage as early as age 65. You must also:
- Be a U.S. citizen or permanent legal resident
- Meet the work credit requirement
You might also be eligible for Medicare if you are under age 65 and meet one of the following conditions:
- You have a disability.
- You have End-Stage Renal Disease, a permanent kidney failure that requires dialysis or a transplant.
- You have been entitled to Social Security or Railroad Retirement Board disability benefits for 24 months.
- You have Lou Gehrig’s disease.
Once you qualify for Medicare, you are automatically enrolled in Medicare Part A. You can then choose to enroll in other parts of the program or to delay enrollment.
If you are over 65 and do not meet any of the above criteria, you still may be eligible to purchase coverage through Medicare Part A. If you are unsure whether you are eligible, you can check using the Medicare Eligibility & Premium Calculator.
The work credit requirement is an algorithm used to determine how long a worker paid into the system.