Monday, May 16, 2022

What Is My Full Retirement Age For Social Security

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How To Receive Federal Benefits

Social Security: What’s Your Full Retirement Age?

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:

Make Changes to an Existing Direct Deposit Account:

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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.

What Can I Do To Plan Ahead

If you are still working, you are in good health, you like your job and you see no reason to stop working, delaying benefits may be the best way to plan ahead.

This is not a one size fits all answer though.

There is such a thing as a breakeven benefit analysis that we Financial Planners like to run because it helps clients make the best decision for their situation.

The fact that you are educating yourself is also a huge advantage and the best way to plan.

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Benefit Amounts Vary Depending On Your Social Security Retirement Age

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.

Taxes On Your Benefits

Social Security Guide

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.

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Get Your Estimated Social Security Benefits

You want to build your Social Security roadmap with accurate information. The best way to do this is to get your Social Security estimation of benefits. You can register for free access to your free Social Security Administration estimate on the Social Security website.

Your Social Security estimate can give you a baseline of what your benefits could look like at various ages. Most importantly, as it stands today, in 2021, 62 years old is the earliest age you can claim Social Security, 67 is full retirement age, and age 70 is the latest you can claim Social Security.

How Should I Decide When To Take Benefits

Consider the following factors as you decide when to take Social Security.

Your cash needs: If youre contemplating early retirement and you have sufficient resources , you can be flexible about when to take Social Security benefits.

If youll need your Social Security benefits to make ends meet, you may have fewer options. If possible, you may want to consider postponing retirement or work part-time until you reach your full retirement ageor even longer so that you can maximize your benefits.

Your life expectancy and break-even age: Taking Social Security early reduces your benefits, but youll also receive monthly checks for a longer period of time. On the other hand, taking Social Security later results in fewer checks during your lifetime, but the credit for waiting means each check will be larger.

At what age will you break even and begin to come out ahead if you delay Social Security? The break-even age depends on the amount of your benefits and the assumptions you use to account for taxes and the opportunity cost of waiting . The SSA has several handy calculators you can use to estimate your own benefits.

If you think youll beat the average life expectancy, then waiting for a larger monthly check might be a good deal. On the other hand, if youre in poor health or have reason to believe you wont beat the average life expectancy, you might decide to take what you can while you can.

A quick note about life expectancy

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Incentives For Delaying Social Security Benefits

The SSA makes it worth your while to wait. For example, if you were born in 1960 or later, you would only receive 70 percent of your Social Security retirement benefits at age 62. If your benefit is $1,000 at full retirement age , you would only receive $700 per month if you start taking benefits at age 62.

But if you wait, your benefits will increase by eight percent each year from your full retirement age until 70. If your monthly benefit is $1,000 at full retirement age and you delay payments until age 70, youll receive $1,240 each month.

You can view a table of the calculations of the impact of claiming early or late retirement benefits here: .

Depending on your age and when you start taking Social Security benefits, the break-even point when delaying payments exceeds taking them early occurs after about 10 years. That may seem like a long time, but Americans are living longer thanks to healthier lifestyles and advances in medical care.

If you think you need this money at 62, you need to put it off because youll really need it when youre 82, says Charles Sachs, a certified financial planner in Miami. As an advisor, Id be concerned that you might live way beyond your life expectancy.

According to data compiled by the SSA, a man reaching age 65 today can expect to live on average until age 84.2. A woman turning age 65 today can expect to live on average until age 86.7.

How Retirement Benefits Work

ð´What is Social Security Full Retirement Age FRA

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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What Does Full Retirement Age Mean

You have 96 dates in which you can elect to start your Social Security check. These dates fall on the 1st of every month from age 62 through age 70.

Full retirement age is the age in which you are entitled to 100% of your earned Social Security benefits. This is also referred to as your primary insurance amount, or PIA.

If you take your benefits before your full retirement age, your check will be reduced.

Say you were born in 1960, making your full retirement age 67. If you take your benefits at 62, your benefit will be reduced by 30% from your PIA.

Lets say you had a PIA of $2,000. If you start your benefits at age 62, your check is going to be reduced to $1,400.

Taking your benefits after your full retirement age increases the benefits.

For every year you delay your benefits, your check increases by around 8%. If you waited until 70 to take your check, and your full retirement age was 67, your check would be increased by 24%.

Listen to the podcast on full retirement age!

Do know that for spousal benefits, there are a little bit different rules. If you are claiming on your spouse and take benefits early, your check will be reduced.

If you are claiming on a spouse, and take your benefits after your full retirement age, your benefit will not increase. The max benefit a spouse can receive is 50% of their partners PIA, which they reach at their full retirement age.

Full Retirement Age Vs Early Retirement Age

While understanding your full retirement age is a key part of the puzzle, its different from when you may start claiming Social Security benefits. Thats your early retirement age, which is 62 regardless of what year you were born. And while all Americans may start receiving benefits when they turn 62, doing so will decrease the amount of each monthly payment.

Heres a bit of the Social Security Administrations official jargon, which is essential for getting a complete picture of your benefits. Full retirement age is how old you must be to receive your full primary insurance amount , or the base-rate Social Security benefit youre eligible for given your lifetime earnings history.

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When A Spouse Dies

When one spouse dies, the surviving spouse is entitled to receive the higher of their own benefit or their deceased spouses benefit. Thats why financial planners often advise the higher-earning spouse to delay claiming. If the higher-earning spouse dies first, then the surviving, lower-earning spouse will receive a larger Social Security check for life.

When the surviving spouse hasnt reached their FRA, they will be entitled to prorated amounts starting at age 60. Once at their FRA, the surviving spouse is entitled to 100% of the deceased spouses benefit or their own benefit, whichever is higher.

The Sooner You File The Less You Get Each Month

8 Things Everyone Wants to Know About Social Security

What difference does it make? People who choose to claim benefits earlier than the full retirement age receive a reduced benefit. That means, if you decide to retire early by SSA standards, the monthly payouts you receive will be lower than those of older, full-age retireesto compensate for the fact that you’re getting them sooner and will presumably be getting them for a longer period of time.

There are several factors that determine the size of your reduced benefits, based on a formula used by the SSA. Individuals born prior to 1938 reached full retirement age at 65. Those born between 1938 and 1960 are on a graduated scale, up to age 67.

Year of Birth
1960 and later67

It is possible that the SSA might continue to raise the full retirement age as a means of coping with its solvency issues.

The Social Security Administration has been slowly increasing the full retirement age as life expectancies lengthen.

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When Can I Retire When Can I Take Social Security

Obviously, people want the option to retire as soon as they likethe earliest age generally being 62. But the decision to take Social Security retirement benefits can be complicated by your health, your marital status and your spouses Social Security plan.

One of the key factors is the year you were born, as when you were born will determine your Full Retirement Age For people born between 1943 and 1954, for example, Full Retirement Age is 66. As shown below, the Full Retirement Age creeps up by two months for every year between 1955 and 1960. Everyone born after 1960 currently has a Full Retirement Age of 67.

Full retirement age doesnt tell the full picture. As we will explain in this piece, retirement at each age has benefits and drawbacks.

Do Survivor Benefits Increase After Full Retirement Age

If you are the surviving spouse who is claiming benefits based on your deceased partner’s work record, there is no benefit to waiting until after FRA to claim your benefits. You do not earn delayed retirement credits, so your benefit will not increase.

However, if you are the higher-earning spouse, delaying your claim for benefits until after FRA can result in your widow receiving more monthly income, as your widowed partner will receive the higher of the two monthly benefits you were each receiving.

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Work Longer And Claim Social Security Later

Working longer is often the first and most important step to maximize your Social Security income in retirement. Firstly, the later you claim Social Security, the larger your monthly payment will be. Secondly, working longer allows you to potentially replace years with lower incomes with your current higher income, thereby increasing your Social Security calculated benefits.

In case you were wondering, Social Security benefits are calculated based on your top 35 years of working and paying into Social Security. For those who havent worked for that amount of time, when reaching retirement age, you will see zero Social Security credit for years not worked, which can reduce your eventual retirement income from Social Security.

WASHINGTON, DC – OCTOBER 14: In this photo illustration, a Social Security card sits alongside … checks from the U.S. Treasury on October 14, 2021 in Washington, DC. The Social Security Administration announced recipients will receive an annual cost of living adjustment of 5.9%, the largest increase since 1982. The larger increase is aimed at helping to offset rising inflation.

3. Increase Your Income While Working

Earning more will increase the amount of Social Security you will receive in retirement. Simply put, the more money you make, the more you pay into the Social Security system the more you pay in, the more you should receive in benefits. Increased income will only help up to a certain point.

4. Delay Claiming Social Security Benefits

Change In How You Report Earnings

When is YOUR Full Retirement Age for Social Security?

The Social Security Administration bases its benefit calculations on earnings reported on W-2 forms and on self-employment tax payments. Most individuals are not required to send in an estimate of earnings.

However, the Social Security Administration does request earnings estimates from some recipients: those with substantial self-employment income or those whose reported earnings have varied widely from month to month, including people who work on commission. Toward the end of each year, Social Security sends those people a form asking for an earnings estimate for the following year. The agency uses the information to calculate benefits for the first months of the following year. It will then adjust the amounts, if necessary, after it receives actual W-2 or self-employment tax information in the current year.

Once a beneficiary reaches full retirement age, his or her income will no longer be checked. Because there is no Social Security limit on how much a person can earn after reaching full retirement age, there is nothing to report.

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What If I Delay Taking My Benefits

If you retire sometime between your full retirement age and age 70, you typically earn a “delayed retirement” credit . For example, say you were born in 1951 and your full retirement age is 66. If you started your benefits at age 68, you would receive a credit of 8% per year multiplied by two . This makes your benefit 16% higher than the amount you would have received at age 66. .

That higher baseline lasts for the rest of your retirement, and serves as the basis for future increases linked to inflation. While its important to consider your personal circumstancesits not always possible to wait, particularly if you are in poor health or cant afford to delaythe benefits of waiting can be significant.

If you decide to wait past age 65, you may still need to sign up for Medicare. In some circumstancesyour Medicare coverage may be delayed and cost more if you do not sign up at age 65.

To review your situation, your annual Social Security statement will list your projected benefits at age 62, full retirement age, and age 70, assuming you continue to work and earn about the same amount until age 62, full retirement age, or age 70 before retiring. If you need a copy of your annual statement, you can request one from the Social Security Administration .

Does Working After Full Retirement Age Increase Social Security Benefits

Working after full retirement age could increase your Social Security benefits. Your benefits are based on average wages over your 35 highest-earning years .

Even after you’ve reached full retirement age, and even if you’ve already claimed benefits, the Social Security Administration continues to recalculate your average annual wage to account for new income. If your earnings after FRA are higher than previous years and raise your average wage for your 35 top-earning years, your benefits could rise accordingly.

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