Thursday, May 19, 2022

What Is The Best Month To Start Social Security

Don't Miss

Are You Retiring Early

When Is The Best Time To Start Collecting Social Security? – Dave Ramsey Rant

The age of 65 has long been considered the unofficial retirement age, but many people are deciding to retire sooner than this. If you plan to retire early, remember that you will be assessed a 10% penalty on withdrawals you make from a traditional IRA or 401k before you reach age 59½.

So if you will turn 59½ at any time during the year you plan to retire, you should wait until after your birthday to retire and begin taking distributions from these accounts in order to avoid this early withdrawal penalty.

Read More: When Can You Withdraw From Your 401k or IRA Penalty Free?

Bringing Cost Of Living Into The Equation

When you factor in the cost of living adjustment that SSA provides, there’s even a stronger case for George to wait. The SSA reasons that costs of living rise by 2% each year, and they reflect this as an increase in the monthly benefit checks.

So with this added bonus, George can expect the more true figures to be as follows:

  • $479,047 if he started benefits at age 62
  • $541,840 if he started benefits at age 66
  • $567,416 if he started benefits at age 70

If George lives to age 82, he will collect the maximum amount of income over his full life by waiting until age 70 to begin taking his benefits. In George’s case, his break even age is 80. This means that if he waits until age 70 to collect, he must live to at least age 80 to receive the same total dollars he would have received if he started taking benefits earlier.

As you can see, there is a lot of money at stake. And of course, no one knows how long they’ll live with any certainty. But you can still make a solid choice about when to receive your Social Security benefit by weighing the many outcomes, as George did.

What If I Change My Mind

If you receive Social Security benefits at a reduced rate, but then change your mind, you have the option of withdrawing your application and paying back to the government what you’ve already received . Then, you could restart benefits at a later date to take advantage of a higher payout. But you are limited to one withdrawal per lifetime.

For example, let’s say you elected to receive early benefits at age 62, but then decided to go back to work at age 63. You could withdraw your Social Security application within the first 12 months of receiving benefits, pay back the years worth of benefits you received, go back to work, and then wait until a later age to restart your benefit checks at a higher level.

For important details about repaying benefits please read the SSA publication If You Change Your Mind.

Also Check: How To Figure Your Social Security

Earned Income Before Age 66 Or 67

The Social Security Administration defines your full retirement age as the day you are able to start collecting benefits. It depends on the day you were born, and for most people ends up being about age 66 or 67. But you’re allowed to retire, as the SSA defines it, as early as age 62. If you reach this age and you are still working, you may wish to start receiving your benefits right away, but this doesn’t always make the most sense in the long run.

Why? Because if you earn over the earnings limit, your benefits will be reduced. The SSA uses your own income to figure how much they should pay each month, and if you’re making money they assume you don’t need the full amount. But once you reach full retirement age your benefit each month will stay the same, whether or not you have any other sources of income.

You should also keep in mind that when tax season rolls around, your benefits are counted as income, and so your monthly check from the SSA will be taxed along with any other income you earn.

What Happens If You Claim After Your Fra

Ask Larry: What Is The Best Month Of The Year To Start ...

If you wait until youre 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. You also need to weigh in some other factors, including your expected longevity and whether you plan to file for spousal benefits. You will also need to consider the tax, investment opportunity, and health coverage implications.

You May Like: How To Check If Social Security Is Being Used

In A Rush To File For Social Security Benefits At Age 62 Many People Are But Slow Down And Do The Math First Or You Might Regret It

When it comes to claiming Social Security retirement benefits, you may want to consider waiting to start benefits when youre 70.

That means not starting benefits when youre 62 , nor even full retirement age .

I know that starting benefits at age 70 might be a tough thing to reconcile with but it doesnt mean that you have to work until youre 70.

Here are three reasons why delaying taking your Social Security benefit to age 70 is a decision you may want to consider:

How To Get A Social Security Card

  • Gather your documents. Learn what documents you’ll need to get a card.; Select your situation:
  • Adult or child
  • Original, replacement, or corrected card
  • U.S. born citizen, foreign born U.S. citizen, or noncitizen;
  • Apply online for a replacement card. Apply online if youre not changing anything on your card and you are eligible. This option is available in most states. You will need to make a my Social Security account first. Or complete an; application. If you can not apply online, fill out an application and return it to the SSA. Find out where to take it in person or mail it.
  • Read Also: How To Calculate Social Security Benefits At Age 70

    Dont Count On The Social Security Office To Give You Advice

    Youd think that you could call Social Security and get advice, but their personnel arent trained and in fact are instructed not to give you advice.

    So much as Id like to give you a specific answer, a lot depends on your unique situation and a one size fits all answer could cost you thousands of dollars. So youll have to forgive me for passing the buck to professionals. Id advise you to get professional advice or use online software to help you find the best time to begin collecting SS.

    Will Your Expenses Decrease After You Retire

    How to Max Your Social Security Income When You Retire

    Retirement could be more expensive than you expect.

    If you’re planning an active retirement or carry a mortgage or other debt, retirement may be more expensive than you expect. Some regular expenses like your out-of-pocket health care costs will likely increase as you get older. You can protect your retirement lifestyle by reducing your largest expenses. You can also increase your regular income by claiming at your full Social Security benefit age or later. If you claim earlier, your monthly benefit could be reduced by as much as 30 percent.Create a retirement budget.

    Retirement could be more expensive than you expect.

    If you’re planning an active retirement or carry a mortgage or other debt, retirement may be more expensive than you expect. Some regular expenses like your out-of-pocket health care costs will likely increase as you get older. You can protect your retirement lifestyle by reducing your largest expenses. You can also increase your regular income by claiming at your full Social Security benefit age or later. If you claim earlier, your monthly benefit could be reduced by as much as 30 percent.Create a retirement budget.

    Maintain your lifestyle by planning ahead.

    Maintain your lifestyle by planning ahead.

    Many people find retirement is more expensive than expected.

    Many people find retirement is more expensive than expected.

    Recommended Reading: Should You Give Someone Your Social Security Number

    Do Social Security Benefits Start The Month Of Your Birthday

    When To Enroll in Retirement BenefitsThe choice to begin accepting benefits as early as allowed versus delaying until full retirement age or later is a personal one. Regardless of the age you choose to collect, the payment schedule hinges on the month of your birthday. In the case of family survivors, the point of reference is the birthday of the deceased who earned enough credits for the family to be eligible for survivor benefits.

    Schedule of SS paymentsSocial Security benefits are not prorated. They start the month following the birthday. The schedule, according to AARP, follows this rule: When the birth date falls between the 1st and 10th of the month, the payment is issued on the second Wednesday of the month following the birthday month. For birth dates between the 11th and 20th of the month, expect to be paid on the third Wednesday after the birthday month. For birth dates from the 21st through the last date of the month, recipients will have to wait until the fourth Wednesday of the month that follows the birthday.

    Consequences of Early RetirementThe reason people struggle with the decision of whether to collect at age 62, full retirement or 70 is the exponential difference in benefits. Contrary to what some believe, 66 is not always the full retirement age as defined by the SSA. Retirement age varies with the beneficiarys year of birth, ranging anywhere from age 65, for retirees born in 1937 or earlier, to age 67 for those born in 1960 or later.

    Related articles:

    People Say You Should Hold Off Taking Social Security Until Full Retirement Age Or Later Rather Than Starting Benefits Early I Disagree I Think I Can Do Better By Taking Benefits As Soon As I Can And Investing Them Even If I Earn Only A Modest Rate Of Return And If I Invest More Aggressively I Believe I Can Come Out Even Further Ahead What Do You Think

    Clearly there are instances when someone may be better off taking Social Security sooner rather than holding off until later for a larger benefit. For example, if your health is so poor that you’re virtually certain you won’t make it even into your 80s, then starting payments as early as possible could be the right way to go.

    Similarly, if you’ve effectively been forced into early retirement and have very little or no savings to tap for retirement living expenses, then you may have no choice other than to apply for Social Security as soon as you can, which is age 62.

    But such relatively extreme situations aside, it’s hard to make a compelling case for taking Social Security as soon as you’re eligible. And, frankly, I don’t think your rationale that you’ll do better by taking benefits as soon as possible and investing them rather than delaying for a higher Social Security payment down the road is very compelling.

    Let’s look at some numbers.

    For the sake of this example, let’s assume that your full retirement age is 66 and that you’ll receive a Social Security benefit of $24,000 a year in today’s dollars if you wait to take Social Security until you reach that age.

    If you start taking benefits at 62, however, your payment will be cut by 25%, which means you’ll collect $18,000 a year. Since Social Security benefits are adjusted for inflation, let’s also assume that your benefit increases by 2% a year for inflation.

    You May Like: Is There Short Term Social Security Disability

    Offer From The Motley Fool

    The $16,728 Social Security bonus most retirees completely overlook:;If you’re like most Americans, you’re a few years behind on your retirement savings. But a handful of little-known “Social Security secrets” could help ensure a boost in your retirement income. For example: one easy trick could pay you as much as;$16,728 more… each year! Once you learn how to maximize your Social Security benefits, we think you could retire confidently with the peace of mind we’re all after.;Simply click here to discover how to learn more about these strategies.

    The Motley Fool has a disclosure policy.

    The Motley Fool is a USA TODAY content partner offering financial news, analysis and commentary designed to help people take control of their financial lives. Its content is produced independently of USA TODAY.

    When Is The Best Time Of Year To Retire

    Social Security Cards Stock Photo

    We spend decades saving for a financially secure retirement.

    So when the time comes, it can be exciting and a little bit overwhelming. With some serious financial considerations at play, deciding when to retire is a big decision.

    In addition to carefully planning when you will retire, its also important to determine the best time of the year to quit work. The specific date on which you start your retirement could impact several different factors that affect your retirement finances. These include benefits from your former employer, Social Security distributions, and taxes, to name a few.

    Here are seven factors to consider as you plan the best time of the year to start your retirement.

    Read Also: How Can I Calculate What My Social Security Will Be

    Want $3895 Per Month In Social Security Benefits Here’s The Salary You Need

      Social Security benefits are a substantial source of income for many retirees. However, the average benefit amount is just over $1,500 per month, or around $18,000 per year, according to the Social Security Administration.

      Considering $18,000 per year is barely above the federal poverty line, the average retiree won’t be able to survive on Social Security benefits alone.

      One solution is to boost your retirement savings to supplement your income during your senior years. Another option, though, is to increase your Social Security benefits.

      The maximum amount you can collect in benefits in 2021 is $3,895 per month. But to receive that amount, you’ll need to be earning a certain salary. Here’s what it takes to max out your Social Security benefits.

      No More File And Suspend

      Note that the claiming strategy called file and suspend, which allowed married couples who have reached their FRA to receive spousal benefits and delayed retirement credits at the same time, ended as of May 1, 2016. However, spouses born before Jan. 2, 1954, who have attained their FRA may still be able to file a restricted application. It allows them to claim spousal benefits while delaying their own benefits up to age 70.

      Social Security benefits can be taxable if your combined income is high enough.

      Don’t Miss: What To Do If Your Social Security Number Is Lost

      What To Consider Before Filing For Social Security

      A larger benefit check sounds great, but there are tradeoffs, and soon-to-retire folks should consider multiple issues before they decide one way or the other on when to file. If you really want to consider all the avenues, then youll have to think about your finances and longevity two issues that people have a hard time grappling with.

      But heres the key tradeoff: you can file early and take a reduced benefit, expecting that a shorter lifespan will mean you receive more now, or you could file at full retirement age or later and claim a bigger check, and eventually live long enough to claim more than the first approach.

      Social Security is like longevity insurance, says Brent Neiser, a certified financial planner and former chair of the Consumer Advisory Board at the Consumer Financial Protection Bureau. Its a stream of payments that will not stop throughout your life, so delaying your benefits to keep those payments as large as possible forms a helpful base to your retirement plan.

      Neiser urges those who have not saved enough for retirement to use whatever means possible to postpone their Social Security benefits until after their full retirement age to help boost their future income.

      You can use personal savings to help bridge the gap, but ideally you should plan to work a little longer , Neiser says.

      Watch Out For Hidden Costs

      When To Start Taking Social Security Benefits

      Youll also want to consider other lifestyle factors, especially Medicare. Americans become eligible for federal health insurance coverage at age 65, well after when you can begin to file for Social Security.

      If you stop working at age 62 and lose health insurance, you have to get supplemental insurance to bridge the gap until you turn 65 and Medicare kicks in, Neiser says.

      If you work during retirement, you have another incentive to delay collecting Social Security. Earning too much at a job after you begin collecting your benefit can reduce your payout, but only if you have yet to hit full retirement age.

      However, when you hit full retirement age, your benefit will increase to account for any benefit that was withheld earlier due to working. Heres how much you can earn and not get hit.

      If youre younger than full retirement age for all of 2021, the Social Security Administration will deduct $1 of your monthly check for every $2 you earn above $18,960 per year.

      If you reach full retirement age in 2021, the administration deducts $1 of your monthly check for every $3 you earn above $50,520 until the month you reach retirement age.

      Youll also owe Social Security and Medicare tax on your earnings, even if youre already receiving benefits.

      So those are some potential pitfalls to claiming Social Security early.

      Don’t Miss: How Can I Lock My Social Security Number

      More articles

      Popular Articles