Thursday, September 29, 2022

What Is Social Security Age For Full Benefits

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How Current Claiming Rules Work

ð´What is Social Security Full Retirement Age FRA

Current Social Security rules allow workers to claim retirement benefits starting at age 62, or what’s known as the early eligibility age. Those payments are reduced in exchange for claiming early.

Workers get their full benefits if they wait until their full retirement age.

For those who become eligible for retirement benefits in 2021, that age is 66 years and 10 months.

Workers with a full retirement age of 66 get a 32% increase to their monthly benefits if they wait until 70, while those with a full retirement age of 67 stand to get a 24% increase if they hold out that long.

Yet many still claim early, despite the incentive to wait until full retirement age or later.

In 2019, 32.6% of newly retired beneficiaries were 62, the largest group of first-time claimants. That was followed by 25.3% who were 66 and 12.6% who were 65. Just 7.4% were age 70 or older.

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.

How Does Social Security Work

Social Security is a pay-as-you-go system. Money paid in by current workers is used to pay the benefits for current retirees. Any money that remains goes into the Social Security Trust Fund, to be used in future years when current contributions wont be sufficient to cover all of the programs obligations.

There are two trust funds: the Old-Age and Survivors Insurance Trust Fund, which pays retirement benefits, and the Disability Insurance Trust Fund. By law, the money in the trust funds is invested in U.S. government securities.

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Social Security Disability Programs

In addition to retirement benefits, the Social Security Administration manages two programs that provide benefits to people who are disabled or blind.

Social Security Disability Insurance Program
SSDI supports disabled or blind individuals by providing benefits based on their workers contributions to the Social Security trust fund. Your contributions are based on your earnings or your spouses or parents earnings while in the workforce. Your dependents may also be eligible for SSDI benefits based on your earnings.
Supplemental Security Income Program
SSI benefits are paid out as cash assistance to people with limited incomes and resources who are elderly, blind or disabled. These benefits may also include blind or disabled children. SSI payments are a federal benefit funded by the general fund of the United States not the Social Security trust fund. Some states provide additional state supplemental benefits in addition to the federal SSI payments.

In some cases, people may be eligible for both SSI and SSDI at the same time. The Social Security Administration calls these concurrent benefits. This can happen when a disability qualifies you for Social Security Disability Benefits, but you only get a small amount of monthly SSDI benefits. This may qualify you to receive SSI benefits as well.

Comparing SSDI and SSI Programs

FEATURE
Up to 85%

Income Taxes for Other Benefit Programs

Social Security Benefits If Youre Married

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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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How Much Can The Average Senior Citizen Expect To Benefit From Social Security

Ages 66-67 are magic numbers thats when many people now and later down the road will become eligible to begin receiving Social Security retirement benefits 65 was previously the full retirement age. According to the Social Security Administration, nearly nine out of 10 people ages 65 and older are currently receiving these benefits, and the number of Americans 65 and older is on the rise. By 2035, the SSA believes that the number of people ages 65 and older will increase from approximately 56 million to over 78 million.

You can expect to live just over 20 years once you turn 65, so its important to maximize your Social Security benefit. Heres advice from financial experts on how to get the most out of your Social Security benefit and how much can you expect to receive.

What If I Take Benefits Early

If you choose to receive your Social Security check up to 36 months before your full retirement age, be aware that your benefit is permanently reduced by five-ninths of 1% for each month.

If you start more than 36 months before your full retirement age, the benefit is further reduced by five-twelfths of 1% per month, for the rest of retirement.

For example, lets assume that you stop working at age 62. If your full retirement age is 66 and you elect to start benefits at age 62, the reduced benefit calculation is based on 48 months. This means that the reduction for the first 36 months is 20% and 5% for the remaining 12 months. Overall, your benefits would be permanently reduced by 25%.

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Total Benefits Paid By Year

Year

Workers in Social Security covered employment pay FICA or SECA taxes and earn quarters of coverage if earnings are above minimum amounts specified in the law. Workers with 40 quarters of coverage are “fully insured” and eligible for retirement benefits. Retirement benefit amounts depend upon the average of the person’s highest 35 years of “adjusted” or “indexed” earnings. A person’s payroll-taxable earnings from earlier years are adjusted for economy-wide wage growth, using the national average wage index , and then averaged. If the worker has fewer than 35 years of covered earnings these non-contributory years are assigned zero earnings. The sum of the highest 35 years of adjusted or indexed earnings divided by 420 produces a person’s Average Indexed Monthly Earnings or AIME.

The AIME is then used to calculate the Primary Insurance Amount or PIA. For workers who turn 62 in 2021, the PIA computation formula is:

90 percent of the first $996 of average indexed monthly earnings, plus

32 percent of average indexed monthly earnings between $996 and $6,002, plus

15 percent of average indexed monthly earnings over $6,002

Monthly benefit amounts are based on the PIA. Once the PIA is computed, it is indexed for price inflation over time. Thus, Social Security monthly benefit amounts retain their purchasing power throughout a person’s retirement years.

Working After Full Retirement Age Faq

Social Security: What’s Your Full Retirement Age?

Retirees may work while collecting Social Security benefits, but those younger than their FRA will be subject to the retirement earnings test .

Under this test, if your earnings exceed a certain limit , you will temporarily forfeit some or all of your benefits. Once you reach full retirement age, your benefit is recalculated and you may receive most of that money back.

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Office Of Hearings Operations

On August 8, 2017, Acting Commissioner Nancy A. Berryhill informed employees that the Office of Disability Adjudication and Review would be renamed to Office of Hearings Operations . The hearing offices had been known as “ODAR” since 2006, and the Office of Hearings and Appeals before that. OHO administers the ALJ hearings for the Social Security Administration. Administrative Law Judges conduct hearings and issue decisions. After an ALJ decision, the Appeals Council considers requests for review of ALJ decisions, and acts as the final level of administrative review for the Social Security Administration .

Whats Your Social Security Break

If youre looking to maximize your total lifetime Social Security payout, youll want to conduct a break-even analysis to determine when you should start drawing your benefits.

Your break-even age occurs when the total value of higher benefits starts to exceed the total value of lower benefits .

For example, if you are eligible to collect a reduced $900 benefit at age 62 plus 1 month, and your benefit would increase to $1,251 at age 65 and 10 months, your estimated break-even age is 75 years and 5 months.

If you expect to live beyond that age, it could make financial sense to delay drawing benefits. The Social Security Administrations life expectancy calculator can help you decide.

When it comes to calculating a start date for Social Security benefits, however, theres not an age thats appropriate for everyone. Consider your own financial needs, health and other retirement plans before making the call. If you cant reasonably afford to live without taking benefits, it may make little sense to delay taking your benefit.

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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.

What Is Social Security

Social Security Guide

The Social Security program was established in 1935 to provide retirement income for certain U.S. workers. It was later expanded to cover most of the workforce. Today, it remains Americas pension plan and the financial lifeline that many people use to stay afloat in their old age.

Social Security provides 37% of elderly men and 42% of elderly women with at least 50% of their income. For 12% of elderly men and 15% of elderly women, its at least 90% of their income. There are specific rules for filing or updating your Social Security.

How does Social Security work? Regardless of your age, you really should know. Here are the answers to 10 questions that people most often ask.

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Determining Which Retirement Age Is Best For You

Should you take the money and run at age 62? Or hold out until you’re 70? Approximately 50% of people don’t wait past age 62, usually because they need the money, are convinced that Social Security might collapse at a later date, or are fearful of a short life span.

But is early retirement a good option for you? The questions below will help you decide.

Are you still working? Some people, especially construction workers and other physical laborers, are less physically able to handle work at 62, even though they don’t qualify for disability. They may be good candidates for early retirement. However, if you’re still able-bodied and interested in working, you might want to avoid claiming early retirement benefits. If you’re earning a high salary, you’ll miss the opportunity to boost your Social Security payment amount.

Second, you’ll lose one dollar in benefits for every two dollars you earn over the SSA’s earnings limit . There are no such deductions if you work after reaching full retirement age. The SSA provides an online earnings test calculator to determine whether working will lower your retirement benefits.

How’s your health? If you’re convincedâeither by genetics, research, or the amount of time you spend in doctors’ officesâthat you’ll have a shorter lifespan than your peers, it doesn’t make much sense to delay your retirement benefits.

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  • Questions Regarding Social Security

    If you have questions regarding Social Security, you may want to visit the Social Security Administration’s website at www.socialsecurity.gov to find your answers. If you prefer to speak to someone directly, the SSA is available to speak with callers Monday thru Friday from 7:00 a.m. to 7:00p.m. The toll-free number is 800-772-1213.

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    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

    Your Social Security Benefits Will Be Taxed

    The Full Retirement Age for Social Security Answered

    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.

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    Demographic And Revenue Projections

    This section’s factual accuracy may be compromised due to out-of-date information. The reason given is: Several of these projected dates have passed, and some language referring to data as ‘current’, ‘latest’, ‘most recent’, etc. is as old as 2005, or undated. Please help update this article to reflect recent events or newly available information.

    In 2005, this exhaustion of the OASDI Trust Fund was projected to occur in 2041 by the Social Security Administration or by 2052 by the Congressional Budget Office, CBO. Thereafter, however, the projection for the exhaustion date of this event was moved up slightly after the recession worsened the U.S. economy’s financial picture. The 2011 OASDI Trustees Report stated:

    Annual cost exceeded non-interest income in 2010 and is projected to continue to be larger throughout the remainder of the 75-year valuation period. Nevertheless, from 2010 through 2022, total trust fund income, including interest income, is more than is necessary to cover costs, so trust fund assets will continue to grow during that time. Beginning in 2023, trust fund assets will diminish until they become exhausted in 2036. Non-interest income is projected to be sufficient to support expenditures at a level of 77 percent of scheduled benefits after trust fund exhaustion in 2036, and then to decline to 74 percent of scheduled benefits in 2085.

    Ways to eliminate the projected shortfall

    Why Did The Full Retirement Age Change

    Full retirement age, also called “normal retirement age,” was 65 for many years. In 1983, Congress passed a law to gradually raise the age because people are living longer and are generally healthier in older age.

    The law raised the full retirement age beginning with people born in 1938 or later. The retirement age gradually increases by a few months for every birth year, until it reaches 67 for people born in 1960 and later.

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