Friday, May 20, 2022

When Can You Retire On Social Security

Don't Miss

How To Maximize Your Social Security Benefit

Can You Retire on Social Security Alone? (Josh’s Best Tips)

When it comes to Social Security, consider delaying benefits. Every month you claim benefits under your full retirement age 67 for most workers today shrinks your checks, while delaying Social Security past your FRA increases your checks until you reach the maximum benefit at 70.

Delaying benefits means you may have to fund retirement on your own for a few years, but if you live into your 80s or beyond, you’ll probably get more money from the program by doing this than you would by signing up early.

Everyone’s retirement savings strategy is going to look a little different based on their goals and finances. So it’s up to you to figure out which of the above suggestions make the most sense for you right now. Draft a retirement plan if you haven’t already, and put it into action. Then, revisit it in a few months to decide if you need to make any changes.

Much Lower Personal Transportation Costs

In many places, you dont need or want a car. That reduces the monthly budget. And you would be amazed at how much you can save on healthcare costs. In most of the larger cities, the locals all use public transportation. So you can generally get anywhere you want to go on the bus. And the bus fares are cheap. When we were in Cuenca, Ecuador, my bus fare was 12.5 cents USD. Paulettes was twice that because she wasnt over 65.

Taxi and Uber fares are also very inexpensive. Our average Uber fare is under $3. And everywhere we have been, retirees arent worried about keeping up with the Joneses. So even if you do have a car, chances are it is a Hyundai, Kia, or Renault. I cant remember the last time I saw a Lexus SUV.

Most of our groceries and all of our dining out expenses are less than they were in the US, but this can vary depending on lifestyle choices. Almost everywhere we have been had excellent produce markets and grocery stores. If you cant find a local product, most of the grocery stores also carry American brands, but with a higher price due to transportation costs and duties. Restaurant quality is generally good, but better in the larger cities.

What Is The Future Of Social Security

If you’re 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 it’s better to have something than nothing. The 2021 annual report from the Social Security Trustees, released in August 2021, projects that the Social Security Trust Fund has enough resources to cover all promised benefits until 2034. Then, absent a change from Congress, the trustees project that benefits would need to be cut for all current and future beneficiaries to about 78% of scheduled benefits. The 2021 report includes the trustee’s best estimates of the impact from the pandemic, which were not reported on last year.

Over the longer term, changes such as later benefit dates or means testing may be considered.

In any situation, if you’re particularly concerned about the future prospects for Social Security, that’s a good reason to save more, and earlier, for your retirement.

Don’t Miss: Social Security After Age 70

Can I Retire At 55 Social Security

Can i retire at 55 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.

When can a 55 year old collect Social Security? 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.

Can I retire at 57 and collect Social Security? 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.

What is the earliest age to retire for Social Security? The earliest a person can start receiving Social Security retirement benefits will remain age 62. Social Security benefits are reduced for each month a person receives benefits before full retirement age.

C You Can Continue Working And Not Receive Your Retirement Benefits

Can You Increase Your Social Security Checks in Retirement ...

If you decide to continue working and not start your benefits until after full retirement age, your benefits will increase for each month you do not receive them until you reach age 70. There is no incentive to delay filing for your benefits after age 70. Continuing to work may also increase your benefits, because your current earnings could replace an earlier year of lower or no earnings, which can result in a higher benefit amount.

If you are not receiving your Social Security benefits when you turn 65, you will need to apply for Original Medicare three months before you turn 65. If you dont sign up for Medicare Part B when youre first eligible at age 65, you may have to pay a late enrollment penalty for as long as you have Medicare coverage.

However, if you or your spouse are still working and covered under an employer-provided group health plan, talk to your personnel office before signing up for Medicare Part B. Once the covered employment ends, you may be eligible for a Special Enrollment Period to sign up for Part B. If so, you wont have to pay a late enrollment penalty.

Recommended Reading: How Early Can I File For Social Security

How Retirement Benefits Work

Social Security replaces a percentage of your pre-retirement income based on their lifetime earnings. The portion of your pre-retirement wages that Social Security replaces is based on your highest 35 years of earnings and varies depending on how much you earn and when you choose to start benefits.

When you work, you pay taxes into Social Security. We use the tax money to pay benefits to:

  • People who have already retired.
  • People who are disabled.
  • Survivors of workers who have died.
  • Dependents of beneficiaries.

The money you pay in taxes isnt held in a personal account for you to use when you get benefits. We use your taxes to pay people who are getting benefits right now. Any unused money goes to the Social Security trust fund that pays monthly benefits to you and your family when you start receiving retirement benefits.

Additional Information

Answer: If You Are Eligible For Social Security Benefits Based On Your Own Earnings History You Will Receive Some Benefits

Lets look at an example of a teacher in Illinoisa state with an independent pension plan. Upon retirement, she will receive her TRS pension. But she also worked in the corporate sector before becoming an educator and earned 40 credits. Thus, she is eligible for Social Security. Will she receive it?

Some of it, yes. She will not be able to collect the full amount of Social Security as listed on her statement, due to the Windfall Elimination Provision which does not allow a person to collect two full government retirement incomes. The amount that she can collect is determined by this calculator. It takes into consideration the amount of your pension and then decreases the amount of your Social Security by a factor. While WEP cannot completely eliminate your Social Security benefit, it can reduce it to a very small amount.

Read Also: Sociat Security

Receiving Benefits While Working

You can work while you receive Social Security retirement or survivors benefits. When you do, it could mean a higher benefit for you and your family.

Each year, we review the records of all Social Security beneficiaries who have wages reported for the previous year. If your latest year of earnings is one of your highest years, we recalculate your benefit and pay you any increase you are due. The increase is retroactive to January of the year after you earned the money.

Spouses Who Dont Qualify For Their Own Social Security

When Can I Retire and Collect Social Security? What’s The Best Age?

Spouses who didnt work at a paid job or didnt earn enough credits to qualify for Social Security on their own are eligible to receive benefits starting at age 62 based on their spouses record. As with claiming benefits on your own record, your spousal benefit will be reduced if you take it before reaching your FRA. The highest spousal benefit that you can receive is half of the benefit that your spouse is entitled to at their FRA.

While spouses get a lower benefit if they claim before reaching their own FRA, they will not get a larger spousal benefit by waiting to claim after their FRAsay, at age 70. However, a nonworking or lower-earning spouse may get a larger spousal benefit if the working spouse has some late-career, high-earning years that boost their benefits.

Also Check: Will I Get Social Security Benefits

What Should You Do Instead Of Focusing On Increasing Social Security Checks

Although it doesn’t hurt to take steps to raise your Social Security check, this isn’t the foundation of a secure retirement. Instead, your focus should be on saving as much as possible.

Unlike Social Security, there’s no maximum limit on how much monthly income your savings can provide or how much you can boost the amount you save. If you invest enough money and invest wisely, your retirement investments could produce far more money each month than Social Security ever could.

That means if you want the best chance for a secure retirement, you should:

  • Save as much as you can afford to. While the standard rule-of-thumb was to save 10% of your income for retirement, it’s best to bump up that amount to a minimum of 15% to 20% since people are living longer and projections for future returns are lower. If you can do even better, you’ll be able to enjoy a higher quality of life as a retiree.
  • Invest wisely. This means building a diversified portfolio of investments you’ll hold for the long term. Depending on the type of retirement account and your level of investing knowledge, this could involve buying ETFs or individual stocks.
  • Start investing as early as possible. The younger you are when you begin investing, the more compound growth will help your portfolio balance grow.

These three steps can have a far greater impact on your life as a retiree than any decisions you make regarding Social Security. They should be the focus of your retirement planning efforts.

How Does Full Retirement Age Affect Your Social Security Benefits

If you claim your benefits at full retirement age, you will receive your standard Social Security benefit amount. If you claim prior to FRA, you will be subject to early filing penalties that reduce your benefit by the following amounts:

  • 5/9 of 1% for each of the first 36 months before FRA
  • 5/12 of 1% for each subsequent month before FRA

This amounts to a 6.7% annual reduction for each of the first three years and an additional 5% reduction for each following year before FRA. If you claim benefits at 62 with an FRA of 67, you will face a full 30% reduction in benefits.

By contrast, if you claim benefits after FRA, you receive delayed retirement credits valued at 2/3 of 1% per month. This results in an 8% annual increase to your monthly benefit. Delayed retirement credits can be earned until age 70, after which time there is no financial benefit to delaying your claim. Delayed retirement credits cannot be earned if you are claiming either spousal or survivor benefits.

Don’t Miss: Soical Securty

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.

Can You Receive Social Security Benefits If You Retire Abroad

5 Ways Early Retirement Can Boost Social Security Benefits ...

If you are considering retiring abroad, one of your biggest concerns may be receiving your Social Security benefitsand rightfully so! David McKeegan, Co-Founder of Greenback Expat Tax Services, answers one veterans question about whether or not expats are eligible to receive Social Security benefits when living overseas.

Also Check: How Do I Know How Much Social Security I Will Get

Looking At Social Security Payments

To understand how much of your income Social Security might replace, consider how the benefits get calculated. First, you’ll need to have worked at least 10 years to qualify at all. The SSA will then look at the 35 years during which you had your highest earnings and apply a formula to determine your potential payment at full retirement, which is between age 66 and 67, depending on your birth year.

Video of the Day

You can retire as young as 62, but this means seeing your monthly benefits cut anywhere from 25 to 30 percent. Retiring as late as 70, however, means you can get an increase in your benefits by up to 8 percent each year. Cost-of-living adjustments will also apply annually and add to the amount you receive in Social Security payments by direct deposit or debit card.

To learn more about your potential benefits based on your lifetime earnings record, you can get a “my Social Security” account through the SSA website. This will require providing your Social Security number and other identifying details. You’ll also be able to access a retirement estimator that will let you account for potential earnings changes and adjustments. You can use the calculator to estimate your spouse’s benefits too.

How To Find The City That Fits You

Cost is only one reason to choose where to live in retirement. You may want to stay close to children and grandchildren. Strong friendships or community ties might also keep you in a certain location, even if where you live is no longer tied to a job.

Quality healthcare, good options for active lifestyles, and a pleasant climate are other factors to consider when you decide where to retire. If relocation is an option for this new chapter of your life, take comfort knowing that many U,S, cities offer a quality lifestyle that you can afford.

Read Also: How Much Is Social Security Check

When Can You Begin To Claim Social Security Survivor Benefits

Survivor benefits to family members from a contributor depend on the age when that worker died, with fewer credits needed the younger the worker dies. The Social Security Administration has a special rule whereby the surviving children, and spouse who is caring for the children can receive survivors benefits after the worker has attained just six credits in the three years prior to his or her death.

The Social Security Administration will continue to pay survivors of someone already receiving retirement or disability benefits at the time of their death based on that entitlement.

Question: Can You Collect Your Own Pension And Social Security Benefits

Can You Take Social Security at 62 and Still Work Retirement Question

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:

  • Those who teach in states with independent pension plans
  • Those whove worked in a capacity besides teaching and have paid into Social Security through that work
  • 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.

    Also Check: When To Receive Social Security Benefits

    How To Calculate Social Security Benefits

    Lets say your FRA is 66. If you start claiming benefits at age 66 and your full monthly benefit is $2,000, then youll get $2,000 per month. If you start claiming benefits at age 62, which is 48 months early, then your benefit will be reduced to 75% of your full monthly benefitalso called your primary insurance amount. In other words, youll get 25% less per month, and your check will be $1,500.

    That reduced benefit wont increase once you reach age 66. Rather, youll continue to receive it for the rest of your life. It may go up over time due to cost-of-living adjustments , but only slightly. You can do the math for your own situation using the Social Security Administration Early or Late Retirement Calculator, one of a number of benefit calculators provided by the SSA that can also help you determine your FRA, the SSAs estimate of your life expectancy for benefit calculations, rough estimates of your retirement benefits, individualized projections of your benefits based on your personal work record, and more.

    Although the cost-of-living adjustments announced each year are usually only slight increases, Social Security benefits will increase by 5.9% in 2022, marking the largest increase since 1982.

    More articles

    Popular Articles