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.
In 2022, the average monthly premium for Part D will be $33 per month versus $31.47 in 2021. If you enroll in a Medicare Advantage plan, the average monthly premium will be $19 per month in 2022 versus $21.22 in 2021. However, if you are still receiving health insurance from your or your spouses employer, you might not yet have to enroll in Medicare.
As of Oct. 16, 2021, Social Security offices 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.
An Advanced Claiming Strategy
If you or your spouse reached age 62 by the end of 2015, you qualify for a Social Security claiming strategy called restricted application.
Here’s how it works: The younger spouse claims Social Security benefits based on his or her own earnings record.
When the older spouse reaches full retirement age , he or she files a restricted application for spousal benefits only. At that point, both spouses are claiming benefits based on the younger spouse’s earnings record.
Then, at age 70, the older spouse claims benefits based on his or her own earnings record, which have increased to 132% of what that spouse would’ve been eligible for at FRA.
See how it works:Restricted application
When Can I Start Collecting Social Security Retirement Benefits
The Social Security Administration used to consider 65 to be full retirement age for the retirement benefit. Benefits amounts were calculated on the assumption that most workers will stop working full time and will claim retirement benefits when they reach age 65.
Now that people are generally living longer, Social Security’s rules about what is considered full retirement age have changed. Age 65 is still considered full retirement age for anyone born before 1938. But full retirement age gradually increases from age 65 to 67 for people born in 1938 or later. For anyone born after 1960, the full retirement age is 67.
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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.
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.
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Brief History Of Social Security
The Social Security program was created by the Social Security Act that President Franklin D. Roosevelt signed into law in 1935. The first checks went out in 1940. Originally it paid benefits only to workers 65 and older, but in the 1970s the government altered it to allow workers to claim benefits as early as 62. It also instituted annual cost-of-living adjustments to help Social Security keep pace with inflation.
The program has worked fairly well so far, but many people fear for the future, when there will be fewer workers to support a greater number of Social Security recipients. The latest Social Security Trustees’ Report indicates the program’s trust funds would be depleted by 2034, after which it would be able to pay out only about 76% of benefits to retirees and about 92% to disabled workers.
The government has proposed several possible solutions for ensuring the long-term sustainability of the program, but at present no plans have been set. There’s no risk of the program disappearing in the next decade or two, but it’s possible future benefits may not go as far as they do today. That’s why today’s workers need to prioritize their personal retirement savings, so they can cover most of their expenses on their own.
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Things To Know About Working While Drawing Social Security
Thinking about working while receiving Social Security benefits? Heres what to expect.
Thinking about working while receiving Social Security benefits? Heres what to expect.
If youre nearing retirement, youve probably got an idea of what your monthly Social Security benefit will be at age 62, the earliest age you can begin drawing Social Security, your full retirement age or at age 70, when you would receive the maximum benefit. Depending on your circumstances, its generally better to wait to draw Social Security until at least your full retirement age, since the benefit will be reduced by about 30 percent if you take Social Security at age 62.
However, if you plan to continue working even part-time after you begin drawing Social Security, its important to understand how working will affect your monthly benefit, tax liability and future Social Security benefit amount.
Find out four important facts about drawing Social Security retirement benefits while working below
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Direct Deposit: Its The Law
Effective March 2013, a new law went into effect requiring that all Social Security benefits be paid electronically. This means benefits due to you are directly deposited into a bank account of your choosing. The change means a quicker delivery of benefits as well as being safer and more convenient for customers.
The U.S. Treasury administers the Direct Deposit program and can answer questions for customers who call their helpline at 1-800-333-1795. For information and to sign up for the electronic delivery of funds, go to the Go Direct website at
The Treasury will also grant waivers in rare instances. To request a waiver or for more information, call 1-855-290-1545.
How to contact the Social Security Administration
TTY number: 1-800-325-0778
E-mail: Fill out a contact form located at
The Problem: The Economic Toll From The Pandemic Will Very Likely Affect Social Security Benefits
The initial retirement benefits that Social Security beneficiaries receive in the first year of retirement are determined by a formula that depends, in part, on the growth of average wages in the economy. Due to the economic fallout from the COVID-19 pandemic, the key measure of average wagesthe average wage index is very likely to decline in 2020. As a result, the initial retirement benefits for those who are first eligible to receive benefits in 2022when they reach the age of 62would be significantly less than what was anticipated only months ago, before the pandemic began to exact its economic toll. The effect is very likely to be so significant that workers turning 62 in 2022 would receive initial retirement benefits that are less than those of workers who were born a year earlier and who had essentially the same earnings history. This incongruity is what Social Security experts call a benefit notch. Such a notch would be unfair to the beneficiaries who turn 60 in 2020 and first become eligible to retire in 2022 because benefits are normally expected to grow for each successive cohort of retirees. Moreover, the benefit reduction and notch would have long-lasting consequences, as they not only would affect benefits in the first year of ones retirement but also lower them for every year going forward, as annual benefits are determined by adjusting the initial level for inflation.
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What Happens If You Claim After Your Fra
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.
Social Security Optimization: Maximize Your Benefits Even If You Start Collecting Early
The rule of thumb for collecting Social Security benefits is the earlier you claim, the less you will receive via your monthly check. Conversely, the longer you wait, the larger your monthly benefit check will be. This may be one of the most important economic decisions you will make in your lifetime.
That said, there are certain benefits to claiming Social Security at the earliest age of 62 versus full retirement age or age 70 depending on your circumstances and what youre trying to achieve. Below are some reasons, and ways, to maximize your retirement benefits by claiming them early.
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Is Social Security Based On The Last 5 Years Of Work
Social Security benefits are based on your lifetime earnings. Your actual earnings are adjusted or indexed to account for changes in average wages since the year the earnings were received. Then Social Security calculates your average indexed monthly earnings during the 35 years in which you earned the most.
Can I Retire At 55 And Collect Social Security
So can you retire at 55 and collect Social Security? The answer, unfortunately, is no. The earliest age to begin drawing Social Security retirement benefits is 62. Once you turn 62, you could claim Social Security retirement benefits but your earnings from consulting work could affect how much you collect.
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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.
Beware The Social Security Earnings Test
Bringing in too much money in earned income can cost you if you continue to work after claiming Social Security benefits early. With what is commonly known as the Social Security earnings test for annual income, you will forfeit $1 in benefits for every $2 you make over the earnings limit, which in 2021 is $18,960. Once you are past full retirement age, the earnings test no longer applies, and you can make as much money as you want with no impact on benefits.
Any Social Security benefits forfeited to the earnings test are not lost forever. At your full retirement age, the Social Security Administration will recalculate your benefits to take into account benefits lost to the test. For example, if you claim benefits at 62 and over the next four years lose one full years worth of benefits to the earnings test, at a full retirement age of 66 your benefits will be recomputed — and increased — as if you had taken benefits three years early, instead of four. That basically means the lifetime reduction in benefits would be 20% rather than 25%.
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Eligibility Criteria Are Stringent
The Social Security Disability Insurance program provides modest but vital benefits to workers who become unable to perform substantial work on account of a serious medical impairment. Although some critics charge that spending for the program is out of control, the bulk of the rise in federal disability rolls stems from demographic factors: the aging of the U. S. population, the growth in womens employment, and Social Securitys rising retirement age. Other factors including the economic downturn also have contributed to the programs growth, but its costs and caseloads are generally in step with past projections.
Social Security Entitlement Requirements
Many people who are eligible for Supplemental Security Income may also be entitled to receive Social Security benefits. In fact, the application for SSI benefits is also an application for Social Security benefits. We often need to obtain additional information from the person before we can award Social Security benefits.
The following sections provide information on who may be entitled to Social Security benefits.
TO BE ELIGIBLE FOR SOCIAL SECURITY BENEFITS AS A WORKER YOU MUST BE:
Age 62 or older, or disabled or blind and
“Insured” by having enough work credits.
For applications filed December 1, 1996, or later, you must either be a U.S. citizen or lawfully present alien in order to receive monthly Social Security benefits.
HOW MUCH WORK DO YOU NEED TO BE”INSURED”?
We measure work in “work credits”. You can earn up to four work credits per year based on your annual earnings. The amount of earnings required for a work credit increases each year as general wage levels rise.
To be eligible for most types of benefits , you must have earned an average of one work credit for each calendar year between age 21 and the year in which you reach age 62 or become disabled or blind, up to a maximum of 40 credits. A minimum of six work credits is required, regardless of age.
The rules are as follows:
|Born After 1929|
WHO CAN RECEIVE BENEFITS ON YOUR EARNINGS RECORD?
If you are receiving retirement or disability benefits, your spouse may qualify if he or she is:
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Policy Basics: Top Ten Facts About Social Security
Social Security provides a foundation of income on which workers can build to plan for their retirement. It also provides valuable social insurance protection to workers who become disabled and to families whose breadwinner dies.
Eighty-five years after President Franklin Roosevelt signed the Social Security Act on August 14, 1935, Social Security remains one of the nations most successful, effective, and popular programs.
Tax Considerations For Social Security Benefits
How do these tax considerations affect when you should apply for Social Security benefits? At todays , they may not have much of an impact on most people. Still, tax rates and income thresholds can change, so its worth remembering that you will lose less of your Social Security to taxes if you are in a lower marginal tax bracket when you begin to collect.
You should also note that if you decide to return to work, even part-time, and arent yet at your FRA, your Social Security benefits may be temporarily reduced. The reduction is $1 for every $2 of earned income over $18,960 in 2021 . During the year when you reach your FRA, your benefits will be reduced by $1 for every $3 in income over $50,520 in 2021 until the month when you become fully eligible. That money isnt lost, however. The SSA will credit it to your record when you reach your FRA, resulting in a higher benefit.
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You Have A Shorter Life Expectancy
The government incentivizes waiting to collect your Social Security benefits by giving you a larger monthly amount the longer you delay. For example, if you start collecting benefits at age 62 when your full retirement age is 66, your monthly benefit will be about 75% of your full-age benefit. So if you expected your monthly benefit to be $1,000 per month at 66, you would only receive around $750 at 62.
Although a larger monthly benefit might sound great, keep in mind that you’d have to wait four years to get that extra $250 per month. You would receive $36,000 during those four years at the reduced amount of $750 per month.
When you start collecting $1,000 at age 66, that extra $250 per month won’t let you break even for 12 years compared to collecting early. If your health is declining and you don’t expect to live until you’re 78, you’ll receive more in benefits during your lifetime if you start claiming as soon as possible.