How To Use The Grids
Here are the specific grid rules for people who are aged 60 and older. Find the grid that describes your RFC . Next, find the row that describes your education level and your previous work experience. The final column will show the decision that Social Security will make based on the previous factors.
RFC for SEDENTARY WORK
Recent education or training for skilled work
Skilled or semiskilled work with or without transferable skills
It can be difficult to determine the skill level of your old job and whether any of the skills you learned can transfer to another position. If you are unsure about this, you should speak to an experienced disability attorney.
What Is The Future Of Social Security
If youre skeptical about the future of Social Security or wary of potential changes such as means testingwhich could reduce or eliminate benefits for the wealthy, or an increase in the full retirement ageyou may be tempted to start benefits early, under the assumption that its better to have something than nothing. The 2020 annual report from the Social Security Trustees, released in April, projects that the Social Security Trust Fund has enough resources to cover all promised retirement benefits until 2035, and will cover 79% of scheduled benefits for new retirees thereafter without changing the current system. The 2020 report does not include an adjusted projection due to impacts, if any, from the pandemic.
Over the longer term, changes such as later benefit dates or means testing may be considered.
In any situation, if youre particularly concerned about the future prospects for Social Security, thats a good reason to save more, and earlier, for your retirement.
Social Security Benefits For Surviving Spouses
If your spouse was receiving Social Security benefits upon their death, you must report the death as soon as possible. You can call the Social Security Administration at 1-800-772-1213 between 7 a.m. and 7 p.m. on weekdays or visit your local Social Security office in person.
You are eligible for a one-time, lump-sum death benefit of $255 from Social Security if:
- You were receiving benefits on your spouses record at the time of death, or
- If you were living in the same household as your spouse at the time of death.
Any benefits received in the name of your spouse during the month of death or later must be returned to the Social Security Administration as soon as possible.
If your spouse worked long enough under Social Security, you may be eligible for Social Security benefits. You must be age 60 or older or disabled and 50 or older to qualify.
How much youll receive depends on the percentage of your spouses benefit as well as your age and the type of benefit youre eligible for.
You must apply for survivor benefits in person. You can call Social Security at 1-800-772-1213 to request an appointment.
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The Best Explanation Of The Windfall Elimination Provision
If you have a pension from a job where you did not pay Social Security taxes, your benefit may be reduced by the Windfall Elimination Provision .
How do you know if youll be impacted? Dont expect it to be on your Social Security benefits statement.
This may surprise you but your Social Security statement does not reflect any reduction in benefits due to this provision. The Social Security Administration will wait until you file to tell you how much the reduction is if you qualify for both Social Security and a non covered pension.
Understanding if a reduction in benefits will apply to you, and how much that will be, does not have to wait until you file for Social Security. You can find out today. It starts by understanding the mechanics of the Windfall Elimination Provision.
The Social Security Amendments of 1983 introduced the Windfall Elimination Provision as part of an effort to keep individuals from double dipping. This was defined as receiving both a pension from a job where they did not pay Social Security taxes and a Social Security benefit.
This new provision began to reduce Social Security benefits for those who worked in a job in which:1) They did not pay Social Security taxesand2) Qualified for a pension from that joband3) Worked at another job where they qualified for Social Security benefits.
Before You Make Your Decision
There are advantages and disadvantages to taking your benefit before your full retirement age. The advantage is that you collect benefits for a longer period of time. The disadvantage is your benefit will be reduced. Each person’s situation is different. It is important to remember:
- If you delay your benefits until after full retirement age, you will be eligible for delayed retirement credits that would increase your monthly benefit.
- That there are other things to consider when making the decision about when to begin receiving your retirement benefits.
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Do You Get A Full Month Social Security On The Month Of Your Birthday
Generally, the day of the month you receive your benefit depends on your birthday, or that of the person on whose record youre collecting benefits: If the birthday is between the 1st and the 10th of the month, you will receive your first payment on the second Wednesday of the month after that birthday.
How Much Will You Depend On Social Security
Let’s be clear: Social Security isn’t meant to sustain seniors by itself. Right now, those benefits are designed to replace about 40% of the average earner’s preretirement income, while most seniors need roughly double that amount to live comfortably. Furthermore, the latest Social Security Trustees Report stated that once the program’s trust funds run out, which could happen as soon as 2035, recipients could see up to a 20% reduction in scheduled payments. Therefore, depending on Social Security in the absence of independent savings is a very bad idea.
The fact of the matter, however, is that many seniors do rely on Social Security alone to pay their bills. If you’re behind on savings, and that’s therefore your plan, you probably can’t afford to reduce your benefits in any way. In that case, you should commit your full retirement age to memory, and aim to file for benefits then — not before. If you claim benefits before full retirement age, the lower monthly payment you lock in will remain in effect for the rest of your life unless you manage to undo your benefits application and repay every cent you collected to the Social Security Administration within a year. And chances are that’s not a hit you can afford.
Tips For Ensuring A Comfortable Retirement
- If you want to build a retirement plan, a financial advisor can help you reach your retirement goals. SmartAssets free tool can pair you with advisors in your area based on your needs. Get started now.
- Save, save, save. To be able to put off taking Social Security benefits until youre 70, youll need to have enough stashed away to live off of until then. Our retirement calculator can help you figure out how much youll need to save to retire comfortably.
- Start saving early, and take advantage of employer matches. With our 401 calculator, you can see how much your 401 will be worth when you reach retirement.
- Think hard about where you want to retire. Not all states are equally tax-friendly to retirees. Use our retirement tax-friendliness tool to see how tax-friendly your home state is, and whether Social Security benefits are taxable at the state level there.
Taking Social Security At 62
Unless you meet a few clear-cut criteria, you’ll want to give the idea of taking Social Security at age 62 quite a bit of thought before you apply for benefits. Unless you have a critical illness, you’ll likely receive more income over your lifetime by starting your benefits later.
If you live to age 84, you can get varying amounts, depending on whether you start Social Security at age 62, 66, or 70. To do the math, multiply your monthly benefit amount times twelve months, then multiply that by the number of years you expect to receive benefits.
- Age 62: $835 × 12 × 22 = $220,440
- Age 66: $1,114 × 12 × 18 = $240,624
- Age 70: $1,470 × 12 × 14 = $246,960
You get more total income by waiting until age 70 to begin benefits. If you live longer, the age 70 plan works even better for you than the examples above.
For instance, if you start your benefits at 70 and live to age 94, you’ll receive over $423,360 from Social Security. If you’d started at 62, you’d only get $320,640.
In general, the longer your life expectancy, the longer you should wait to start drawing Social Security.
Below are a few general guidelines you can use to determine whether it makes sense to take Social Security retirement benefits at age 62.
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Could I Be Eligible For The Canada Pension Plan And The Quebec Pension Plan
If you contributed to the CPP or the QPP in at least one year, you will be eligible for a retirement pension from one plan or the other as early as age 60.
The amount of your CPP retirement pension will depend on how much and for how long you have contributed to the CPP and on your age when you want your pension to start.
If you start your CPP retirement pension at age 65, you will get the full pension amount that you are eligible to receive. However, you can choose to start receiving a reduced pension as early as age 60 or an increased pension for every month you delay receiving it up to age 70.
For more information about CPP pension amounts and eligibility, visit Canada Pension Plan.
You must apply to receive your CPP or QPP retirement pension.
Note: Post-Retirement Benefit
The Post-Retirement Benefit is a lifetime benefit that can increase your retirement income if you work while receiving the CPP retirement pension. Contributions are mandatory for working CPP retirement pension recipients under age 65 and their employers. At age 65, these workers can choose to stop contributing. There are no contributions after age 70. For more information, visit Canada Pension Plan Post-Retirement Benefit .
The CPP and QPP also provide disability and survivor benefits. You must apply to receive these benefits.
- TTY: 1-800-603-3540
The Best Age For Social Security Retirement Benefits
As you get older, you start thinking more about retirement distributions than contributions. One of the biggest questions that near-retirees have is, What is the best age to start collecting Social Security benefits? Most take the benefits right away, but that isnt always the best option. A financial advisor can help you optimize a plan for your retirement needs. You can start collecting Social Security benefits any time between ages 62 and 70. Lets take a look at how Social Security works, and what you need to know when deciding the best age for your retirement.
The best age for Social Security benefits depends on personal and financial factors, like your current cash needs, retirement plans, health and family history. Be sure you weigh the decision carefully and dont hesitate to find a financial advisor to talk to if need be. The age you choose to start taking Social Security will affect the monthly amount you receive for the rest of your life.
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Benefit Increasesthe Power Of Social Security
The most important part of Social Security is that the benefit increases each year. This is called a COLA
Many people choose an age to apply for social security, but dont account for the COLA. This is a big mistake.
The COLA is powerful because it protects your income from inflation. Think about how much you made twenty or thirty years ago. Could you live off of that today? What were house prices back then? What about gas or cheeseburger prices?
The average retirement lasts twenty to thirty years. On top of that, medical costs tend to increase faster than other types of costs. And we all know medical costs become more important later in life. This is why its important to have inflation protection on your income. And thats exactly what Social Security offers.
Each year the benefit goes up a little bit based on the CPI-W, which is a measure of inflation. The CPI-W differs slightly from the regular CPI by measuring inflation costs for urban workers. HIstorically, its been slightly higher than the standard CPI, which is a good thing, but there is talk of changing it to the standard CPI in the future.
Heres a chart showing the power of the COLA. In this example, you have a monthly benefit of $3,000 claimed at a full retirement age of 67, and an average COLA of 2% per year.
Not bad. This is why filing at the right time is so important.
What Is The Least Social Security Will Pay
A worker has to have at least 11 years of earnings to qualify for the special minimum benefit, with a minimum amount earned each year. That minimum gets changed every year based on inflation. For 2019, a person would have to earn at least $14,805 to get credit for the year for special minimum benefit purposes.
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What If The Trust Fund Runs Out
If the trust fund runs out, the current projections according to the Social Security Trustees report is that enough taxes will be collected to pay 7879% of promised benefits.
This raises the question, Should we take our benefit early to lock it in? But taking benefits early will not exempt you from a cut if the trust fund is depleted. The current law is that the cut is across the board, which means every benefit will be cut by 2122% whether you are currently receiving benefits or not. Congress would have to pass a bill to change this.
From what we know currently, the above seems to be the worst-case scenario. It assumes that Congress, instead of stepping up to the plate and agreeing on reform, decides not to take action. We do know that there has been a bi-partisan committee established to work on solutions to the issue, but no bills have been drafted at this time to propose for debate.
In fact, as of December 2020, the trust fund is still increasing. 2020 results:
- Total income: $1.118 trillion
- Net increase in assets: $ 11 billion
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|
|65+2 months for every year after 1937|
Merrill: Talk A Little More About That How Might Postponing Your Payments Work To Your Benefit
Storey: Well, imagine that at age 66 youâre entitled to an annual Social Security benefit of $10,000. If you wait a year to claim it, you’ll forgo the $10,000 for the first year, but the following year at age 67, youâll receive an annual benefit of $10,800 or 8% moreâan amount, by the way, that is adjusted for inflation, if any, each year for the rest of your life.
Why It’s Easier To Get Disability After Age 60
For older workers, in particular claimants 60 and older, Social Security must consult a series of tables called the “grids” to decide if a person is disabled. The grids are a set of rules that take into consideration a disability claimant’s age, residual functional capacity , education, and work history to determine whether the claimant should be approved or denied.
The reason claimants over the age of 60 are much more likely to be approved under the grids is because Social Security takes into consideration the fact that it may be harder for older workers to learn new skills and to transition into new workplaces. That said, if you worked at a skilled job before you became disabled and you could put your skills to use at a less demanding type of job, you won’t be approved for disability just because you are older.
Here is what the grids take into account.
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