Wednesday, August 10, 2022

What Age Should I Apply For Social Security

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How Long Does It Take For Me To Receive My First Check

At What Age Should I Apply for Social Security Benefits?

Once your application is approved and your benefits have been calculated you should receive a check within 30-45 days of your retirement date. If you do not receive the check and you are sure your application was approved, call your local Social Security office to learn why you havent received our check.

Once You Know Your Benefit How Far In Advance Should You Apply For Social Security

Its important to file for Social Security before your planned filing age, because it takes 3 months from when you file until you start receiving benefits.

You can apply up to four months early, and we recommend that you take advantage of that so you dont have any surprises.

You dont want to go through the process of deciding when to file for Social Security only to apply late, miss some payments, and throw your plan off.

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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Bridge To Medicare At Age 65

Remember that while you are eligible for reduced Social Security benefits at 62, you won’t be eligible for Medicare until age 65, so you will probably have to pay for private health insurance in the meantime. That can eat up a large chunk of your Social Security payments.

Read Viewpoints on Fidelity.com: Your bridge to Medicare

What Happens If You Claim After Your Fra

What

If you wait until your age 70 to start claiming benefits, then youll get an extra 8% per yearor, in total, 132% of your primary insurance amount for the rest of your life. Claiming after you turn 70 doesnt increase your benefits further, so theres no reason to wait longer than that.

The longer you can afford to wait after age 62 , the larger your monthly benefit will be. Nevertheless, delaying benefits doesnt necessarily mean that youll come out ahead overall. Other factors should be considered, including your expected longevity and whether you plan to file for spousal benefits. You should also consider the tax, investment opportunity, and health coverage implications.

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What If I Am Divorced

You may still receive a spouses benefits if you divorced as long as:

  • You were legally married for at least 10 years
  • Your ex-spouse has remained unmarried
  • Your ex-spouse is older than 62
  • Your ex-spouses benefit based on their employment would be lower than the benefit you would receive based on your employment.
  • You qualify to receive disability benefits or Social Security benefits

Read more about getting ex-spousal Social Security benefits here.

How The Retirement Age Could Change

Retirement ages were last altered in 1983 under then-President Ronald Reagan.

Those changes, which raised the full retirement age to 67 from 65, are still being phased in today.

Even just the bump up to age 66 from 65 represented a 5% benefit cut, Elsasser noted.

Many experts expect that any future changes could push up the Social Security retirement age. Notably, the Social Security 2100 Act: A Sacred Trust, introduced by Rep. John Larson, D-Conn., last year, would leave those thresholds unchanged and, in some respects, make benefits more generous. But the legislation has a five-year timeframe.

Separately, the Social Security Administration has scored the financial effects other proposals to change the age thresholds could have on the program.

Just in 20 years, we’ve seen a substantial increase in the retirement age.Mark J. Warshawskysenior fellow at the American Enterprise Institute

“I expect that at some point in the not too distant future, Congress will agree on a Social Security package that includes some type of adjustment to the retirement age,” Akabas said. “Whether that’s in two years or 10 years, it’s very difficult to predict.”

Experts say it’s possible the full retirement age could get pushed up by a year or two, which could be gradually phased in.

Additionally, lawmakers could also raise the initial age for eligibility for retirement benefits from 62, as well as the highest age for delaying benefits and earning benefit increases from 70.

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At What Age Are You No Longer Eligible To Apply For Social Security Disability

Havent applied for early retirement, but youre between 60 and 65 years old? Then youre in luck! You can apply for Social Security disability up until one year reaching before your full retirement age . Typically, that means you can still get approved for SSD benefits at 65, if you meet all other requirements. But once you reach your FRA, your SSD benefits automatically convert into regular Social Security retirement payments. That means any claimants age 66 and older cannot qualify for SSD, because they now qualify for regular Social Security.

Social Security Benefits If Youre Married

When Should I Apply for Social Security?

Determining Social Security calculations is a bit more complicated if you are married because you have the option to base benefits on your spouses salary history.

If the lesser earning spouses benefits are based on the higher earning spouses, then the limit of those earnings will be 50 percent of the higher earning spouses benefit amount.

To illustrate this, lets talk about A and B, a married couple.

  • A makes significantly more money than B.
  • A makes so much more money that As monthly Social Security benefits are going to be more than twice of Bs, based on Bs salary history.
  • The good news for B is that they can choose to have their Social Security benefits based on As salary history and can receive as much as 50 percent of As monthly benefit. This is the case even if B didnt hold a job outside the home.

On the other hand, if Bs monthly benefit would have been more than half of As, based on Bs salary history, then B can claim that amount.

In short, B can claim the higher of these two possibilities: Bs own Social Security earnings or half of As.

This all assumes that B doesnt begin claiming benefits until B reaches full retirement age. If B begins claiming earlier, then Bs benefits will be less. In addition, if B is claiming benefits based on As earnings, then B does not benefit by waiting later than full retirement age.

B will not be given more monthly benefits if B waits until age 70, for example, based on As earnings.

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Are Social Security Benefits Taxable

When deciding which age to apply for Social Security, its important to understand how Social Security fits into your retirement taxes.

For example, in a year where you receive a buyout from your employer, you may not want to take social security benefits because they will be subject to higher taxes.

Taxation of benefits depends on provisional income.

Provisional income = AGI + one-half of SS benefit + tax-exempt interest

The calculation of provisional income includes income from other sources like IRA withdrawals, pensions, annuities, or part-time jobs. Then, they add half of your total Social Security benefits to it. And finally, they add in any tax-exempt interest, like if you had municipal bonds.

After calculating provisional income, they apply certain breakpoints to determine the amount of taxable Social Security. Once the breakpoints have been reached, some of your Social Security benefits are included in taxable income.

Heres the breakpoint chart:

Filing status
85%

The key numbers to remember are $32,000 for Married, and $25,000 for single.

If your income is below those numbers, then Social Security is not taxed at all. You may think that doesnt apply to you because your income hopefully wont be that low, but keep in mind that Roth distributions dont count for provisional income. There are planning techniques like Roth Conversions that can take advantage of this and reduce the taxation on Social Security.

Get Ssa Benefits While Living Overseas

U.S. citizens can travel to or live in most, but not all, foreign countries and still receive their Social Security benefits. You can find out if you can receive benefits overseas by using the Social Security Administrations payment verification tool. Once you access the tool, pick the country you’re visiting or living in from the drop-down menu options.

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How Your Social Security Benefits Are Calculated

Your Social Security benefits are based on the 35 calendar years in which your income was the highest. If you have fewer than 35 years of earnings, each year with no earnings will be entered as zero. You can increase your Social Security benefit at any time by replacing a zero or low-income year with a higher-income year.

There is a maximum Social Security benefit amount you can receive, though it depends on the age you retire. For someone at full retirement age in 2021, the maximum monthly benefit is $3,113. For someone filing at age 70, the maximum monthly amount is $3,895.

Reasons Not To Take Social Security At Age 62

Age Computation Payment Social Security Retirement Age Chart / Social ...

One reason to delay your benefits is that Social Security will withhold part of your benefits if you earn more than the annual Social Security earnings limit. This only applies before your full retirement age of 66 or 67. A portion of your Social Security benefit is withheld and slowly paid back to you after you reach your full retirement age.

As of 2022, during the year you reach full retirement age, the Social Security Administration withholds $1 from your benefits for every $3 you earn above $51,960.

There is no reason to wait until you’re past the age of 70 to begin drawing Social Security.

In the years before you reach the year you turn full retirement age, the SSA withholds $1 for every $2 you earn above $19,560 .

You may also want to wait if you’re single, have little saved for retirement, and have a longer life expectancy. In this situation, you should consider working as long as possible to maximize your benefits then, wait as long as you can to begin your benefits, since you don’t have other retirement accounts to draw on.

If your spouse still works and has earned income, a larger portion of your Social Security benefits will be taxed if you start before your full retirement age.

Another consideration is if you’re married, your spouse’s benefit might be smaller than yours, and/or your spouse is much younger than you. When married, your combined life expectancy will be longer than either of yours as a single person.

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Social Security Disability Age Categories

The SSA divides applicants into the following age groups when making decisions about eligibility for disability benefits. The older you are the more likely you are to be approved. This is because there is less chance of gaining employment at an older age than a younger age. The groups are:

  • 18 to 49 years of age
  • 50 to 54 years
  • 55 years and over
  • 60 years and over.

As well as age, education level also helps to determine who is eligible for disability benefits. The lower your educational level is, the more likely you are to get approved. This is because the SSA knows it is more difficult for people with less education to find suitable jobs. The SSA divides education levels in the following way:

  • the applicant has graduated from high school or higher and has completed a recent skilled training
  • the applicant is at least a high school graduate or higher but without recent skilled training
  • the applicant only has a limited education which is normally 11th grade and below, and is unable to read and write.

The Downside Of Claiming Early: Reduced Benefits

Consider the following hypothetical example. Colleen is 62 as of 2022. If Colleen waits until age 67 to collect, she will receive approximately $2,000 a month. However, if she begins taking benefits at age 62, she’ll receive only $1,400 a month. This “early retirement” penalty is permanent and results in her receiving up to 30% less year after year.

However, if Colleen waits until age 70, her monthly benefits will increase another 24% over what she would receive at her FRA, to a total of $2,480 per month.1 If she were to live to age 89, her lifetime benefits would be about $112,000 more, or at least 24% greater, because she waited until age 70 to collect Social Security benefits.2

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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.

Benefit Amounts Vary Depending On Your Social Security Retirement Age

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

    Your Social Security retirement age and the amount you receive varies depending on several factors. For example, the earliest age you can collect your Social Security retirement benefits is 62, but there is an exception for widows and widowers, who can begin benefits as early as 60. If you start collecting benefits early and continue to work, your benefits may be reduced.

    Here’s how this works with the basics on Social Security claiming ages from 60 to 70.

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    Social Security Keyword Cheat Sheet:

    Thats a lot of acronyms to remember, so heres a handy reference to keep track of them:

    • AIME: Your average monthly earnings, in todays dollars, of your 35 highest earning years
    • PIA: the amount you will receive at your full retirement age
    • FRA: full retirement age67 if born 1960 or later, 66 through 66 and 10 months if born before .
    • COLA : annual increases due to inflation

    Watch Out For Hidden Costs

    Youll also want to consider other lifestyle factors, especially Medicare. Americans become eligible for federal health insurance coverage at age 65, well after when you can begin to file for Social Security.

    If you stop working at age 62 and lose health insurance, you have to get supplemental insurance to bridge the gap until you turn 65 and Medicare kicks in, Neiser says.

    If you work during retirement, you have another incentive to delay collecting Social Security. Earning too much at a job after you begin collecting your benefit can reduce your payout, but only if you have yet to hit full retirement age.

    However, when you hit full retirement age, your benefit will increase to account for any benefit that was withheld earlier due to working. Heres how much you can earn and not get hit.

    If youre younger than full retirement age for all of 2021, the Social Security Administration will deduct $1 of your monthly check for every $2 you earn above $18,960 per year.

    If you reach full retirement age in 2021, the administration deducts $1 of your monthly check for every $3 you earn above $50,520 until the month you reach retirement age.

    Youll also owe Social Security and Medicare tax on your earnings, even if youre already receiving benefits.

    So those are some potential pitfalls to claiming Social Security early.

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    How Can I Increase My Retirement Benefits

    There are multiple ways you can increase your retirement benefits. This article mentioned a few ways briefly. Below is a list of other ways you could increase your benefits payment.

    Social Security benefits can be increased by:

  • Delaying your retirement
  • Continuing to work while receiving Social Security benefits.
  • Collect Spousal benefits
  • Apply for a survivors benefit
  • Avoid Social Security tax by staying under the taxable combined income rate
  • When To Apply If You’re Turning 70

    Managing Your Social Security Benefits

    Social Security won’t automatically start sending you checks once you turn 70, with one exception: If you took benefits after reaching full retirement age and then suspended your benefits to earn delayed credits of 8% per year, your benefits will automatically restart at 70.

    Otherwise, you’ll need to file an application. The earliest you can file for Social Security is four months before you want your benefits to start.

    Regardless of when you file, make sure you specify that you want your benefit to begin the month you turn 70 to get the maximum amount. Social Security pays a month behind, so expect your first payment to arrive the month after your 70th birthday. For example, if you were born on May 10, you’d request that your benefits start in May and receive the first payment in June.

    But there is an exception if you were born on the 1st of the month. For those people, Social Security calculates benefits as if they were born the previous month. So if you were born May 1, you’d request that your benefits start in April. Your first payment would arrive in May.

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