Thursday, June 16, 2022

When Can You Claim Social Security Benefits

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Claiming Before You’ve Worked Long Enough

WATCH NOW: Social Security, Medicare benefits vary depending on when you claim them

You have to earn at least 40 credits in order to qualify for Social Security. One credit is equal to $1,510 in earnings in 2022, and you can earn a maximum of four credits per year. If you haven’t worked long enough to earn 40 credits, you must do so before you can claim any type of benefit based on your work history.

Whenever possible, work at least 35 years before signing up. The government bases your Social Security benefit on your average monthly income during your 35 highest-earning years. If you don’t work at least this long, you’ll have zero-income years factored in and this will reduce your monthly benefit.

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Expecting Social Security Will Cover Everything

It would be great if Social Security could cover all of your living expenses in retirement, but this isn’t going to happen for most people. That’s why it’s important to save plenty of money on your own to cover what Social Security doesn’t.

You can use your my Social Security account to estimate your Social Security benefit at various starting ages. Do this before you sign up so you know what to expect. And if you’re concerned about not having enough, consider delaying retirement or Social Security to balance your budget.

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How Do You Apply For Social Security Benefits

If you are eligible for Social Security benefits, you can apply online, by phone or by appointment at a local Social Security office.

How to Apply for Social Security Benefits

Online
Applying online is the easiest way to apply for Social Security benefits. The Social Security website allows you to apply for retirement, spouses, Medicare and disability benefits at the same site. You can also apply for Supplemental Security Income benefits.
Phone
If you dont have Internet access, you can sign up by phone. You can call the Social Security Administration at 1-800-772-1213 .
In-person
The Social Security Administration has restrictions on office visits during the COVID-19 pandemic. It does allow in-person visits for certain services. You should check with the SSAs Coronavirus page to see if you can make an in-person appointment at your local office.

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When Should You Start Collecting Social Security Benefits

To determine when you should start taking your benefits, its important to understand how much your check is affected by when you claim your benefit. As mentioned before, you can claim your benefit as early as age 62, but reaching full retirement age can secure your full benefit.

So when exactly is full retirement age? That depends on when you were born.

Year of birth
65 + 2 months for each year past 1937
1943-1954
66 + 2 months for each year past 1954
1960 and later67

While the full retirement age used to be 65, changes to the program have increased that age. For example, those born in 1955 now have to wait an extra two months beyond age 66 to claim their full benefit. Someone born in 1959, for example, would have to wait until age 66 and 10 months to get the full benefit. Anyone born in 1960 or later, receives their full benefit at 67.

But some retirees choose to wait even longer. You may wait until as late as age 70 to claim your benefit, but then you must take it. Youll receive a bigger check for doing so.

So what is the upside to delaying your Social Security benefit after age 62? Your check wont get hit by a serious benefit reduction. Heres how much a $1,000 monthly check will become if you claim your benefit as soon as youre eligible at age 62.

Year of birthIf you file at 62, benefit reduced by:A $1,000 check becomes
$700

No One Else Is Relying On Your Benefits

How You Can Claim Social Security Benefits From Your ...

In the event of your death, a surviving spouse, minor or disabled child can receive money from the Social Security Administration based on the amount of your benefits. For example, a surviving spouse can receive between 71.5% and 100% of your benefit amount, depending on the surviving spouses age. A disabled child can receive 75% of your benefits each month even after youre gone.

If no one else can qualify for benefits based on your record, you might want to retire early because no one is depending on that money. If everything else falls into place and you meet the minimum Social Security retirement age, consider collecting your benefits early and enjoying life.

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What If A Spouse Passes Away

Upon the death of the spouse, the widow or widower may be eligible for a Social Security survivor benefit, which is equal to the full benefit of the deceased spouse. The surviving spouse will keep whichever of the couples two Social Security payments is higher.

If the surviving spouse remarries at age 60 or older, he or she can still receive the survivor benefit. However, remarrying before age 60 eliminates eligibility to collect the deceased spouses benefit.

Social Security Benefits And Inflation

Under the law, Social Security benefits increase each year to keep up with inflation. These increases are known as COLAs, or cost-of-living adjustments.

Research has found, however, that benefits do a poor job of compensating for seniors increasing costs, especially as health care and housing make them more vulnerable to inflation risk.

The Senior Citizens League says program benefits have lost 33 percent of buying power since 2000, citing the 2019 Loss of Buying Power Study, which found that January 2000 through January 2019 COLAs increased Social Security benefits by 50 percent, but the cost of goods and services purchased by typical retirees rose more than twice as fast 100.3 percent.

The study, which compares the price increases of goods and services used by retirees to the increase in Social Security benefits since 2000, notes the rapid inflation of fresh fruits and vegetables and prescription drugs.

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Claim Social Security Too Early There Are Still Ways To Increase Your Income

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Seniors elect to claim benefits early for a variety of reasons, ranging from needing the income immediately to wanting to invest the money for a bigger long-term payoff. But sometimes they come to regret the decision.

If you feel like you claimed Social Security too early, there are ways to increase your income to help pay unforeseen bills or finance a lifestyle change. Three options as outlined by The Motley Fool follow.

Know Your Social Security Full Retirement Age

If Your Spouse Dies, Can You Collect Their Social Security Benefits?

First things first:Determine your Social Security full retirement age. For people born between 1943 and 1954, full retirement age is 66. If your birthday falls between 1955 and 1959, it gradually climbs to 67. If you are born in 1960 or later, your full retirement age is 67.

You can claim your Social Security benefits a few years before or after your full retirement age, and your monthly benefit amount will vary as a result. More on that in a moment.

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What Is Full Retirement Age

The size of your monthly Social Security benefit depends on a few factors, including how much you earned over the years, the year you were born, and the age when you start claimingdown to the month.

Youll receive your full monthly benefit if you start claiming when you reach what Social Security considers your full retirement age , sometimes also referred to as normal retirement age. FRA was 65 when Social Security began, but it has been raised to 67 for anyone born in 1960 or later. To find your FRA, see the chart below.

Finding Your Full Retirement Age
67

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.

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How Are My Social Security Benefit Amounts Calculated

The calculations are complicated. The amount of any benefit is determined by a formula based on the average of your yearly reported earnings since you began working.

But to complicate matters further, Social Security computes your average earnings differently depending on your age. If you reached age 62 or became disabled on or before December 31, 1978, Social Security averages the actual dollar value of your total past earnings — and bases the amount of your monthly benefits on that amount.

If you turned 62 or become disabled on or after January 1, 1979, Social Security divides your earnings into two categories: Earnings from before 1951 are credited with their actual dollar amount, up to a maximum of $3,000 per year and from 1951 on, yearly limits are placed on earnings credits, no matter how much you actually earned in those years.

How Much Do You Have To Earn To Claim The Maximum Social Security Benefit

You can still claim Social Security spousal benefits ...

Social Security taxes phase out once you reach the maximum wage base for a given year. If you earn above that maximum, you wont have to pay any more Social Security tax for that year. However, you also wont earn any additional credits for your Social Security retirement benefit. To qualify for the maximum Social Security payout, youve got to be a top earner. In fact, youll have to earn at least the maximum wage base for at least 35 years. For 2021, the Social Security wage base was $142,800. This number is indexed for inflation, so back in 1985, the wage base was just $39,600.

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Youre Concerned Social Security Will Disappear

Some people are concerned about potential Social Security changes in the future, such as higher retirement ages, lower benefits or higher taxes on benefits. As a result, they want to take the sure thing as soon as possible. In a 2017 Social Security summary, the government said Social Security trust funds will be depleted in 2034. Even then, however, annual Social Security taxes are projected to keep benefits at almost three-fourths of current levels.

Can You Switch From Your Social Security Benefit To A Spousal Benefit

Yes. If you begin collecting your own Social Security benefits at age 62 but your spouse keeps working for another few years, you are eligible to your spouses benefit after they retire if it is higher than your own. Thus, your spouse will get the maximum amount and you can file for 50% of the amount your spouse would receive at full retirement age.

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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.

Does Your Age Affect Your Social Security Payout

When is the Best Time to Start Claiming Social Security Benefits?

Age is absolutely a key factor in the size of your Social Security payout. The top payout of $3,895 is only available to those who delay claiming their benefit as late as possible, which is age 70. If you want to claim Social Security at 62 instead, which is the earliest allowable age, the maximum Social Security benefit drops to $2,324. If you retire any time between age 62 and age 70, your benefit amount will be adjusted accordingly between these two extremes.

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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%.

Should I File For Divorce Before My Spouse Starts Receiving Benefits

The answer to this question depends on your current circumstances and why you are filing for divorce.

Regardless, when you apply for the divorce, you are still eligible for your spousal social security as long as you have been married for ten years. But before you can receive this benefit, your divorce has to be at least two years, even if your former partner hasnt filed for divorce yet.

Generally, it is best to apply for spousal social security if you are still married and consider divorce final. Also, it is vital to know and save your ex-spouses Social Security numbers and dates of birth. That will make the enrollment process smooth and faster.

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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.

Not Coordinating With Your Spouse

Can I Claim Social Security Spousal Benefits?

Married people can either claim benefits on their own work record, if they qualify, or on their spouse’s work record. A spousal benefit is worth up to 50% of their partner’s benefit. The Social Security Administration automatically gives you whichever of the two benefits is larger, though you can’t claim a spousal benefit until your partner signs up.

It’s a good idea for married couples to decide each person’s starting age together so they can get the most out of the program. It might make sense for both to delay benefits as long as possible. Or you might prefer for one person to sign up early while the other delays for larger checks.

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Don’t Miss: Who Gets Social Security Benefits

Claiming Social Security Benefits At The Right Time Means More Money In Your Pocket Here’s A Guide To Everything From Knowing Your Full Retirement Age To Taking Social Security Spousal Benefits

For many Americans, Social Security benefits are the bedrock of retirement income so maximizing this stream of income is critical.

The rules for claiming Social Security benefits can be complex, but this guide will help you successfully navigate the details. Educating yourself can ensure that you claim the maximum amount to which you are entitled.

Here are 12 essential details you need to know.

Your Lower Benefit Could Result In Lower Survivors Benefits For Your Spouse

If you have a spouse you expect to outlive you by many years, you may want to think twice before claiming Social Security early. If you lock in a lower monthly benefit, you’ll leave your surviving spouse a lower monthly benefit for the rest of their life.

Now if your spouse was a high earner and is therefore entitled to a generous Social Security benefit of their own, this may not be an issue. But it’s something to think about if you’re the higher earner.

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