Friday, May 13, 2022

What Is Social Security Age Now

Don't Miss

The Best Reason To Take Social Security Long Before Age 70

What is the Full Retirement Age for Social Security?

    One of the greatest things about Social Security is that you’re not tied down to one specific filing age. Rather, you get a range of choices when it comes to signing up for benefits.

    The earliest age you can claim Social Security is age 62. But you should know that you’re not entitled to your full monthly benefit based on your earnings history until you reach full retirement age , which kicks in at 66, 67, or somewhere in the middle, depending on your year of birth.

    You also have the option to delay your Social Security filing past FRA and snag a higher monthly benefit for life. For each year you hold off, up until age 70, your benefits get an 8% boost.

    It’s for this reason that filing at age 70 may hold some appeal. And for some beneficiaries, waiting to file is a very wise choice. But you may want to claim Social Security well ahead of age 70 if this particular scenario applies to you.

    Contrast With Private Pensions

    Although Social Security is sometimes compared to private pensions, the two systems are different in a number of respects. It has been argued that Social Security is an insurance plan as opposed to a retirement plan. Unlike a pension, for example, Social Security pays disability benefits. A private pension fund accumulates the money paid into it, eventually using those reserves to pay pensions to the workers who contributed to the fund and a private system is not universal. Social Security cannot “prefund” by investing in marketable assets such as equities, because federal law prohibits it from investing in assets other than those backed by the U.S. government. As a result, its investments to date have been limited to special non-negotiable securities issued by the U.S. Treasury, although some argue that debt issued by the Federal National Mortgage Association and other quasi-governmental organizations could meet legal standards. Social Security cannot by law invest in private equities, although some other countries and some states permit their pension funds to invest in private equities. As a universal system, Social Security generally operates as a pipeline, through which current tax receipts from workers are used to pay current benefits to retirees, survivors, and the disabled. When there is an excess of taxes withheld over benefits paid, by law this excess is invested in Treasury securities as described above.

    How Does Full Retirement Age Affect Your Social Security Benefits

    If you claim your benefits at full retirement age, you will receive your standard Social Security benefit amount. If you claim prior to FRA, you will be subject to early filing penalties that reduce your benefit by the following amounts:

    • 5/9 of 1% for each of the first 36 months before FRA
    • 5/12 of 1% for each subsequent month before FRA

    This amounts to a 6.7% annual reduction for each of the first three years and an additional 5% reduction for each following year before FRA. If you claim benefits at 62 with an FRA of 67, you will face a full 30% reduction in benefits.

    By contrast, if you claim benefits after FRA, you receive delayed retirement credits valued at 2/3 of 1% per month. This results in an 8% annual increase to your monthly benefit. Delayed retirement credits can be earned until age 70, after which time there is no financial benefit to delaying your claim. Delayed retirement credits cannot be earned if you are claiming either spousal or survivor benefits.

    Also Check: What Determines My Social Security Benefit

    Increasing The Eligibility Age For Social Security Pensions

    Summary

    Social Security faces a long-term financing problem. Many young workers believe the problem is so severe they may never receive a Social Security check. The most logical solution to Social Securitys financing problem is to trim promised benefits and increase payroll taxes moderately. A sensible way to reduce future benefits is to increase the early eligibility age and normal retirement age for retirement pensions. This reform is justified by the substantial increase in life spans that has occurred since Social Security was established in the 1930s. An increase in life spans, when the normal retirement age remains unchanged, is equivalent to a sizable increase in lifetime Social Security benefits.

    Increasing the retirement age is unpopular with voters. Unfortunately, so are all other reforms that would restore Social Security to solvency, including tax hikes and cuts in the formula for calculating full pensions.

    Social Security Number Theft

    9 Facts About Social Security  Beirne Wealth Consulting ...

    Because Social Security Numbers have become useful in identity theft and other forms of crime, various schemes have been perpetrated to acquire valid Social Security Numbers and related identity information.

    In February 2006, the Social Security Administration received several reports of an email message being circulated addressed to “Dear Social Security Number And Card owner” and purporting to be from the Social Security Administration. The message informs the reader “that someone illegally is using your Social Security number and assuming your identity” and directs the reader to a website designed to look like Social Security’s Internet website.

    “I am outraged that someone would target an unsuspecting public in this manner,” said Commissioner Jo Anne B. Barnhart. “I have asked the Inspector General to use all the resources at his command to find and prosecute whoever is perpetrating this fraud.”

    Once directed to the phony website, the individual is reportedly asked to confirm his or her identity with “Social Security and bank information”. Specific information about the individual’s credit card number, expiration date and is then requested. “Whether on our online website or by phone, Social Security will never ask you for your credit card information or your PIN,” Commissioner Jo Anne B. Barnhart reported.

    Recommended Reading: Social Security Calculation 35 Years

    I Have Some Savings Should I Live On That Rather Than Claim Social Security Now

    This is a very personal decision that depends greatly on your circumstances. Maintaining an emergency fund is always important, and never more so than during times of economic volatility. But people with very substantial savings can draw down safely to cover living expenses while delaying their claim.

    The loss of earned income means you will be in a lower tax bracket, and rates are at historically low levels under the Tax Cuts and Jobs Act of 2017.

    Theres no better time to take money out of a 401 or I.R.A. than when your income is relatively low and you have a lower marginal tax rate, Mr. Finke said.

    A delay of just a few years can be very beneficial. A 62-year-old with a full retirement age benefit of $1,500 would increase her likely lifetime benefits by more than $100,000 by waiting until that point to file, according to a projection by William Meyer, a co-founder of Social Security Solutions, which offers software aimed at helping retirees make optimal claiming decisions. Mr. Meyers calculation assumes that our retiree lives to 90 and that Social Securitys cost-of-living adjustment is 2 percent each year.

    But the pandemic has added a new dimension to claiming decisions for most retirees, the retirement researcher Dirk Cotton said. Since most Americans have modest savings, if any, many of them will need to hang on to what they have.

    Persistent bear market conditions also present an argument in favor of an early claim, Mr. Cotton added.

    Calculate My Social Security Income

    These days thereâs a lot of doom and gloom about Social Securityâs solvency – or lack thereof. And regardless of whether you think Social Securityâs future is secure, the fact remains that you shouldnât plan on living exclusively off your Social Security benefits. After all, Social Security wasnât designed to make up a retireeâs entire income.

    Still, many people do find themselves in the position of having to live off their Social Security checks. And even if you have other income sources in retirement, Social Security can make up a significant part of your retirement income plan. That’s why itâs important to know all the rules surrounding eligibility, benefit amounts, taxation and more.

    Do you need help managing your retirement savings? To find a financial advisor near you, try our free online matching tool.

    Also Check: How To Get Social Security Money

    How Workers Can Get Estimates Of Benefits

    The Social Security Administration provides benefit estimates to workers through the Social Security Statement. The Statement can be accessed online by opening an online account with SSA called my Social Security. With that account, workers can also construct “what if” scenarios, helping them to understand the effect on monthly benefits if they work additional years or delay the start of retirement benefits. The my Social Security account also offers other services, allowing individuals to request a replacement Social Security card or check the status of an application.

    A printed copy of the Social Security Statement is mailed to workers age 60 or older.

    In 2021, SSA began producing Retirement Ready fact sheets, available online and as part of the online Statement, that tailor retirement planning information to different age groups .

    SSA also has a Benefits Calculators web page with several stand-alone online calculators that help individuals estimate their benefits and prepare for retirement. These include benefit calculators for spouses, calculators for persons affected by the Windfall Elimination Provision or the Government Pension Offset and calculators to determine a person’s full retirement age or the effect of the earnings test on benefits.

    SSA also provides a life expectancy calculator to help with retirement planning.

    Reducing Cost Of Living Adjustment

    Rethinking Retirement: What age should you take social security?

    At present, a retiree’s benefit is annually adjusted for inflation to reflect changes in the consumer price index. Some economists argue that the consumer price index overestimates price increases in the economy and therefore is not a suitable metric for adjusting benefits, while others argue that the CPI underestimates the effect of inflation on what retired people actually need to buy to live.

    In 2003 economics researchers Hobijn and Lagakos estimated that the social security trust fund would run out of money in 40 years using CPI-W and in 35 years using CPI-E.

    Recommended Reading: Social Security Break Even Age Calculator

    Claim That Politicians Exempted Themselves From The Tax

    Critics of Social Security have said that the politicians who created Social Security exempted themselves from having to pay the Social Security tax. When the federal government created Social Security, all federal employees, including the president and members of Congress, were exempt from having to pay the Social Security tax, and they received no Social Security benefits. This law was changed by the Social Security Amendments of 1983, which brought within the Social Security system all members of Congress, the president and the vice president, federal judges, and certain executive-level political appointees, as well as all federal employees hired in any capacity on or after January 1, 1984. Many state and local government workers, however, are exempt from Social Security taxes because they contribute instead to alternative retirement systems set up by their employers.

    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.

    Recommended Reading: Check How Much Social Security I Will Get

    How Does Working After Full Retirement Age Affect My Benefits

    Continuing to work past your full retirement age, whether or not you take benefits, can potentially increase your future benefits. Thats because the Social Security administration calculates your primary insurance amount based upon your 35 highest-earning years and uses zeros for the calculation if you have worked fewer than 35 years.

    Working longer replaces each of those zeroes, or even lower earning years if you have no zeros, which boosts your PIA. Its also important to note that lower-earning years after retirement will not affect your benefits since Social Security uses whichever 35 years are your highest earning.

    What Happens If You Claim After Your Fra

    Changes Ahead For Social Security?

    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.

    Recommended Reading: How Much Can I Expect From Social Security

    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.

      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.

      Recommended Reading: Social Secuiryt

      How Current Claiming Rules Work

      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.

      ‘s 59% Cola Is The Largest Since 1982

      What does age have to do with Social Security Disability Benefits?

          Every October, the Social Security Administration announces its annual changes to the Social Security program for the coming year. Below is our summary of the Social Security changes that were announced in October 2021 and are set to take effect on Jan. 1, 2022.

          Don’t Miss: Social Security T

          History Of Full Retirement Age

          FRA was 65 when Social Security began. Amendments to Social Security in 1983 included a provision that allowed raising the FRA beginning with people born in 1938 or later. Improvements in the overall health of older people and increased life expectancy prompted the change.

          Social Securitys trustees project that, starting in 2021, the Social Security Trust Fund will run a deficit and will need to dip into reserves to cover benefit payments. By the most recent estimates, that means the combined reserves of Social Security’s Old-Age and Survivors Insurance trust fund and the Disability Insurance Trust Fund will be depleted by 2034.

          Given concerns about the solvency of the Social Security Trust Fund, coupled with demographic changes and increases in longevity, there has been talk in conservative circles of making the FRA higher. Other possible solutions include increasing taxes, cutting benefits, or a combination of some or all of these changes.

          To figure out your full retirement age, use the online calculator offered by the Social Security Administration .

          How Does This Impact New Retirees

          To understand the impact of the changes to full retirement age and to see why it matters that these changes will no longer affect newly eligible beneficiaries it’s helpful to take a look at some examples.

          The table below shows exactly when FRA is based on birth year:

          Birth Year

          Data source: Social Security Administration

          So for anyone who turns 62 in 2022 or beyond, full retirement age will be 67. These seniors must wait until then to avoid early filing penalties. By contrast, those who turned 62 last year could get their standard benefit at 66 and 10 months, while those who hit this milestone in 2020 were able to claim at 66 and 8 months and not face penalties.

          Now, there’s a chance Congress could make further modifications to Social Security and shift FRA even later for future retirees. But unless that happens, anyone who who first becomes eligible for Social Security retirement benefits this year or in the future will no longer need to delay the start of their Social Security checks longer than their older peers just to get the full benefits they earned over their lifetime of work.

          TURNING 65 IN 2022? Should you claim Medicare and Social Security?

          You May Like: Ssa.gov My Social Security

          More articles

          Popular Articles