If You Were Born Between 1943 And 1954 Your Full Retirement Age Is 66
You can start your Social Security retirement benefits as early as age 62, but the benefit amount you receive will be less than your full retirement benefit amount.
The chart below provides examples of the percentage of your full retirement benefit amount you and your spouse would receive from age 62 up to your full retirement age.
What Other Factors Should You Consider When Deciding To Collect Social Security
Before you decide to collect Social Security based on your break even point, you should also consider how collecting early or delaying could impact the benefit your spouse receives.
Since the Social Security formula benefit is based on an individual’s 35 highest earning years, women often collect less in benefits than men because of career breaks during motherhood and overall lower lifetime earnings. However, the Social Security spousal benefit erases some of the disparity in Social Security earnings between men and women.
The spousal benefit is available to all spouses, regardless of whether the spouse has a work history or not . The spousal benefit is 50% of the higher earner’s benefit and in order for a spouse to receive the benefit, the higher-earner must be collecting their own benefit.
The Social Security administration automatically determines whether an individual would earn more in Social Security benefits if they collected on their own work record versus their partner’s work record.
For example, if the higher earner receives a $2,000 monthly benefit, the spouse is eligible to receive up to $1,000, depending on whether they choose to wait until full retirement age, says Kiner. For example, if someone collects the spousal benefit four years before full retirement age, their benefit will be 35% of the higher-earner’s benefits.
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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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.
Watch Out For Hidden Costs
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.
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Why Not Claim Early And Invest The Benefits In The Markets
This strategy is highly risky, said Elaine Floyd, the director of retirement and life planning with Horsesmouth, a New York company that trains financial advisers on Social Security strategies and other issues.
A beneficiary who goes the investment route, Ms. Floyd said, would need to reap consistently high returns and must be disciplined enough to sock away the money every month. And if the beneficiary is married and the higher earner dies first, the spouse would receive a relatively low survivor benefit.
Ms. Floyd offered a hypothetical beneficiary whose monthly Social Security benefit at full retirement age is $3,000. Say the beneficiary claimed a reduced benefit at 62 and invested the money, earning an inflation-adjusted return of 3 percent a year. By age 95, the cumulative benefits and investments would be roughly $278,000 lower than if the beneficiary had waited until 70 to claim the larger benefit.
Its really an apples-to-oranges comparison, she said. An 8 percent retirement credit and lifetime income from Social Security are the law, but investment returns are not that predictable.
Thinking About Retirement Check This Article
Financial hardships are becoming common occurrence during this pandemic, but as the economy starts to rise and more people return to their jobs, several changes to economic programs and social security benefits, have occurred and people want to know how much they can get from their monthly checks.
Let’s cut to the chase, the maximum amount of money you can get from Social Security payments depends, among other factors, on the age at which you start collecting and your earnings history. In 2022, the maximum is $3,240 a month for someone filing for full-age retirement at age 66. But $4,194 is the highest benefit in absolute terms for those who qualify and delay applying until age 70.
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Take Social Security At 62
For anyone in their 60s thinking about retiring, a difficult decision they face is when to take Social Security.
It is a complex question full of disagreement on the internet and at the water cooler at work. If you Google the question, several articles pop up: 10 reasons to claim Social Security early or three reasons to wait until 70. They all contain conflicting points and perspectives.
As a certified financial planner, I see many different situations. I learned the best age to take Social Security depends on your unique situation.
So how do you figure out this age-old question?
Here are a series of steps to think through to determine the best age to take Social Security.
How is your health? If you are married, how is your spouses health?
Most people dont want to think about how long they might live. If you have several health issues and consider yourself lucky to be here, it might be beneficial for you or your spouse to take Social Security as soon as possible.
Do you have high-interest debts?
Social Security grows at roughly 8% a year for each year you delay until age 70. If you have a five-digit credit card balance and you are paying double-digit interest rates, you might consider taking Social Security to help pay off the debt.
Are you still working? Are you younger than your full retirement age for Social Security?
Once you reach your full retirement age there are no limits on how much you can earn.
Already retired? Already have enough for retirement?
What Salary Is Needed To Receive The Maximum Benefit
To be eligible for maximum benefits, you must have consistently had earnings that have equaled or exceeded the SSAs maximum taxable earnings limit throughout your career.
In 2022, the salary needed to receive the maximum benefit is $147,000.
That means you needed to earn an average of $147,000 or more during those years.
Even if you dont consistently earn the maximum limit, you can still boost your benefit amount by increasing your income with other jobs.
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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.
What About Taxes On Social Security
Keep in mind that Social Security benefits may be taxable, depending on your combined income. Your combined income is equal to your adjusted gross income , plus non-taxable interest payments , plus half of your Social Security benefit.
As your combined income increases above a certain threshold , more of your benefit is subject to income tax, up to a maximum of 85%. For help, talk with a CPA or tax professional.
In any case, if you’re still working, you may want to postpone Social Security either until you reach your full retirement age or until your earned income is less than the annual limit. In no situation should you postpone benefits past age 70.
When I Retire Can I Collect My Pension And Social Security
These tips will help you calculate your retirement income.
Retirement from teaching brings with it many complex financial questions. One of the most common is Am I entitled to collect my pension and Social Security? Two scenarios could allow you to receive both.
However, even if you fall into one of these categories, there are some provisions that make sure you dont double-dip into both a government pension and the Social Security system. Lets take a closer look at each scenario.
How Long Does It Take To Get Fers Retirement Check
How long will it take to process my federal retirement application? It takes approximately 60 days to process applications for common cases.
How is FERS retirement paid out?
FERS is a retirement plan that provides benefits from three different sources: the Basic Benefits Plan, Social Security and the Stream Savings Plan . Then, after you retire, you receive monthly annuity payments for the rest of your life.
How long does it take to get a retirement check?
Typical Processing Timeframes. Your first retirement pay should be processed within 30 to 45 days of your retirement date.
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Question: Can You Collect Your Own Pension And Social Security Benefits
Teachers in some states benefit from the states independent pension plan, while other states offer only coverage in partnership with Social Security. Teachers in the latter states have an easy answer to the question of double-dipping into pension and Social Security. Theyre simply the same thing, so double-dipping is not possible.
Teachers who may find the rules more confusing are:
If you fall into either of these buckets, you may be eligible to receive benefits. However, you must first qualify. Qualifying is based on earning income credits. For every $1,300 you earn, you get one income credit. But you can only earn up to four credits per year. Forty total credits are required to qualify for Social Security benefits, which means youd need to earn four credits per year for 10 years to be eligible. There is no partial benefit, its all or nothing.
B You Can Stop Working And Start Receiving Your Retirement Benefits
If you make the decision to stop working and start receiving retirement benefits before your full retirement age, your benefits are reduced a fraction of a percent for each month before your full retirement age. Also, your benefits will not increase because of additional earnings.
We calculate your benefits based on your highest 35 years of earnings, and if you stop working before you have attained 35 years of earnings or you have years with low earnings, this will affect your benefit calculation.
If you delay your benefits until after full retirement age, you will be eligible for delayed retirement credits that would increase your benefit.
If you stop working and start receiving retirement benefits before age 65, you are automatically enrolled in Original Medicare when you turn 65. If you are not receiving your Social Security benefits when you turn 65, you will need to apply for Medicare benefits three months before you turn 65. If you dont sign up for Medicare Part B when youre first eligible, you may have to pay a late enrollment penalty for as long as you have Medicare coverage.
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Working While Receiving Benefits
You may work after you start receiving benefits, which could mean a higher benefit for you in the future. We may withhold some of your benefits if you earn more than the yearly earnings limit. Sometimes people who retire in mid-year already have earned more than the annual earnings limit. However:
- We have a special rule that applies to earnings for one year, usually the first year you begin receiving benefits. This means we cannot withhold benefits for any month we consider you retired, regardless of your yearly earnings.
- After you reach full retirement age, we will recalculate your benefit amount to take into account any months you did not receive benefits because your earnings were too high.
The Exception To The Rule
You may be able to get both benefits if you opted for early retirement before you received disability benefits. These are also known an concurrent benefits. This exception would be applicable in a situation where an individual retired early due to serious medical conditions. If that individual can prove that they developed the disability prior to receiving early retirement income, theyll be able to earn both benefits.
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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.
Taking Social Security: How To Benefit By Waiting
For those who are able to do so, it may make sense to wait even longer, because youll receive a larger monthly benefit even more than your full benefit. Every month past your full retirement that you delay, Social Security will increase your check by about 0.7 percent per month.
If your full retirement age is 66, then heres how much your check would increase:
|Retirement age||New benefit||A $1,000 check becomes|
So if your full retirement age is 66, then if you can wait two more years and claim benefits at age 68, youll increase your monthly check by 16 percent. In this case, if your full benefit were $1,000 a month, your new benefit would become $1,160 per month. And youll still receive cost of living adjustments on top of this amount, typically raising your payout a little each year.
Workers have other ways to grow their Social Security benefits, too, but its important to start early.
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When I Retire I Will Have 40 Credits Under Social Security Will My Social Security Pension Be Reduced Because I Will Receive A Pension From The Mtrs
If you have 40 credits under the Social Security system , then Social Security will use a modified formula to calculate your pension unless:
- you had 20 years of creditable service under the MTRS before January 1, 1986 or
- you were age 55 and had at least 10 years of creditable service before January 1, 1986 or
- you will have at least 30 years of substantial earnings under the Social Security system. For further information on substantial earnings, contact your local Social Security Administration Office or see more information on the Windfall Elimination Provision below.
If you do not meet any of these requirements, you will receive a reduced Social Security pension. In order to determine the amount of the reduction that applies to you, please contact the Social Security Administration at 800-772-1213.
How Will Working Affect Social Security Benefits
In a recent survey, 68% of current workers stated they plan to work for pay after retiring.1
And that possibility raises an interesting question: how will working affect Social Security benefits?
The answer to that question requires an understanding of three key concepts: full retirement age, the earnings test, and taxable benefits.
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Change In How You Report Earnings
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.