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What Age To Get Social Security Benefits

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Theres A Social Security Spousal Benefit

What is the Best Age to Start Social Security Benefits?

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.

Social Security Retirement Age And Your Birth Year

To calculate your Social Security retirement benefit, start with your birth year. If you were born after 1954 , your Social Security retirement age increases by two months each year. For instance:

  • People born in 1955 reach full Social Security age for retirement at 66 years and two months.
  • People born in 1956 reach full Social Security age for retirement at age 66 years and four months.
  • People born in 1957 reach full Social Security age for retirement at age 66 years and six months.
  • People born in 1958 reach full Social Security age at 66 years and eight months.
  • People born in 1959 reach full Social Security age at 66 years and 10 months.
  • People born in 1960 or later reach full Social Security age at 67 years.

What A Social Security Break

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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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.

What Happens If You Stop Working At 62 But Dont Collect Until Full Retirement Age

8 Things Everyone Wants to Know About Social Security

Contents

  • 4.2.2 What is the average Social Security payment at age 62?
  • If you stop working between age 62 and your full retirement age you can stop working before your full retirement age and receive reduced benefits. The earliest age you can start receiving retirement benefits is age 62. If you file for benefits when you reach full retirement age, you will receive full retirement benefits.

    What if I stop working with 62 but not collect up to 66? What happens if you stop working at 62 but do not collect until full retirement age? You will receive the full retirement age benefit based on your top 35 working years adjusted for COLA.

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    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.

    You Think You Can Get A Better Return

    You’ll get an 8% increase in your benefit each year past your full retirement age, up until you reach age 70. That means if you’re 67 and wait three years to claim benefits, your check will be 24% larger when you finally start.

    But if you’re a savvy investor, it might make sense to start collecting those benefits sooner rather than later. Why? You could collect your Social Security benefits early, invest the money, and beat that 8% annual return.

    Of course, there are risks associated with this strategy. Unless you have a crystal ball, you have no idea how the markets will perform. One bad year could wipe out any gains as well as your initial investment.

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    Learn About Retirement Benefits

    We want you to know what Social Security can mean for you and your familys financial future. In this section, you can learn how Social Security works, whos eligible for retirement benefits, and what to consider before applying. Read on to understand how Social Security fits into your retirement plan.

    The Second Best Choice

    Should you take your Social Security benefits at age 62?

    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.

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    Claiming Social Security At Age 70

    If you are able to delay claiming your Social Security benefit until you reach age 70, you will earn a significantly higher benefit. After your Full Retirement Age of 66 , your benefit goes up by eight percent each year. Consequently, if your full retirement benefit at age 66 was $1,000 per month, and you delay claiming your benefit, it will be $1,080 per month by age 67 or an additional $960 per year. If you delay until age 70, it will be 124 percent of your expected benefit or $1,240 a month. That comes out to $2,880 more each year.

    Delaying past age 70 will not increase your benefit, however.

    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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    There’s One Really Good Reason To Claim Social Security Checks Before 70

    One of the best reasons to claim Social Security before the age of 70 is that there’s a really good chance that you won’t actually be better off if you delay starting your checks.

    See, the purpose of waiting to file for benefits is to get more monthly income once your payments eventually start. But in order to get this future monthly income, you have to give up the prospect of getting paid Social Security benefits starting at age 62. If you wait until 70 when you first become eligible for benefits eight years earlier, you’re going to miss out on thousands of dollars in benefits that could have been deposited in your bank account.

    In an ideal situation, that won’t matter. You’ll get higher monthly benefits, the extra money will end up making up for the income you didn’t get earlier, and you’ll break even. Then, once you do make up for that cash you missed, you’ll hopefully keep getting those higher benefits for months or even years to come, leaving you with more lifetime funds from Social Security.

    And, sometimes this works — if you outlive your life expectancy. If you live into your 90s or longer, you’d definitely end up better off if you waited until 70 to get Social Security checks. But, the fact is that life expectancy is so named because that’s how long you’re expected to live.

    How Retirement Benefits Work

    Social Security Retirement Benefits

    Social Security replaces a percentage of your pre-retirement income based on their lifetime earnings. The portion of your pre-retirement wages that Social Security replaces is based on your highest 35 years of earnings and varies depending on how much you earn and when you choose to start benefits.

    When you work, you pay taxes into Social Security. We use the tax money to pay benefits to:

    • People who have already retired.
    • People who are disabled.
    • Survivors of workers who have died.
    • Dependents of beneficiaries.

    The money you pay in taxes isnt held in a personal account for you to use when you get benefits. We use your taxes to pay people who are getting benefits right now. Any unused money goes to the Social Security trust fund that pays monthly benefits to you and your family when you start receiving retirement benefits.

    Additional Information

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    Workers Who Retire In Certain Foreign Countries

    U.S. citizens who travel toor live inmost foreign countries after they retire usually can receive Social Security benefits. However, if that country is Azerbaijan, Belarus, Cuba, Kazakhstan, Kyrgyzstan, Moldova, North Korea, Tajikistan, Turkmenistan, or Uzbekistan, then the government will not send them Social Security payments. Exceptions may be available in all of these countries except Cuba and North Korea. Use the governments Payments Abroad Screening Tool to see if you will be able to continue receiving Social Security benefits while living abroad.

    Spouses Who Dont Qualify For Their Own Social Security

    Spouses who didnt work at a paid job or didnt earn enough credits to qualify for Social Security on their own are eligible to receive benefits starting at age 62 based on their spouses record. As with claiming benefits on your own record, your spousal benefit will be reduced if you take it before reaching your FRA. The highest spousal benefit that you can receive is half of the benefit that your spouse is entitled to at their FRA.

    While spouses get a lower benefit if they claim before reaching their own FRA, they will not get a larger spousal benefit by waiting to claim after their FRAsay, at age 70. However, a nonworking or lower-earning spouse may get a larger spousal benefit if the working spouse has some late-career, high-earning years that boost their benefits.

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    Social Security Retirement Age And Your Retirement Benefits

    Its important to consider your financial situation and family requirements before making delayed retirement decisions. If youve planned ahead by saving for retirement in a tax-deferred retirement plan, drawing Social Security later can make good financial sense for you. Consider your Social Security retirement age as a first step in making decisions about when to claim Social Security benefits.

    Social Security Full Retirement Age And Delayed Retirement

    7 GOOD REASONS to File for Social Security Benefits at Age 62

    There is obviously a financial bonus to consider. Delaying retirement to your full Social Security retirement age will put more benefits in your pocket. If you reach full retirement age of 66 in 2016, you receive an added eight percent benefit for every year you delay collecting Social Security retirement benefits.

    If you decide to work until age 70 and delay your request of Social Security retirement until that time, your benefit is 32 percent more because of the decision to delay. The decision can have meaningful income consequences. The maximum Social Security retirement benefit in this situation is a monthly benefit of USD 3,501 per month.

    Waiting to draw Social Security retirement benefits pays but, if you must request Social Security at full Social Security retirement age , these benefits are yours. Youve earned them.

    Of course, married people must plan retirement for two. If you earn or earned more money than your spouse, the decision to consider delayed retirement can mean more survivor benefits for your spouse if you die before him or her.

    Lets review some scenarios about when to draw Social Security and Social Security age considerations.

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    Timing And Your Health Coverage

    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.

    Benefits Of Delaying Social Security

    When to start collecting Social Security depends on each retiree’s unique situation. The longer you wait to start collecting, the larger your monthly check will be.

    Also, if you wait until full retirement age to collect, you can earn any amount of money and it won’t reduce your monthly benefits. You can start receiving benefits at 62, even if you’re still working, but here’s the catch. If you start benefits prior to full retirement age, you can only earn up to $18,960 and still get your full benefits. Once you earn more than the limit, Social Security deducts $1 from your benefits for every $2 you earn.

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    Why Age 60 Is Key For Your Social Security Benefit

    Allworth Co-CEO Scott Hanson answers a reader’s question about Social Security.

    Ive always believed that the amount of Social Security Ill receive is based upon the age I retire and the amount of money Ive earned. But I just today heard that the level of something called the national average wage index during the year you turn 60 has a major impact on your future Social Security payments.

    As Ill be 60 this November, please tell me, this cant possibly be true, can it?

    -Ruthie K

    Dear Ruthie:

    Unfortunately, not only is what youve heard true, but almost no one else realizes it, either.

    Thats because, as Ill explain in a moment, what is happening to wages in America right now hasnt happened in 80 years.2 And, most people dont realizebecause its never been an issue in our lifetimesthat your Social Security payments are forever tied to the performance of this wage index during the year you turn 60.

    Ruthie, frankly, this is being underreported and its a big deal.

    First, as you mentioned above, while there are other factors, most pre-retirees believe that their future Social Security benefit amount is calculated by averaging their 35 highest years of wages, along with the age at which they retire. And, historically, when it comes to those key numbers , thats pretty much the case.

    And for the more than four million people born in 1960? Unless something drastic happens, depending on their other sources of income, this could mean trouble.

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