Are You Still Working
Americans may file for Social Security benefits when they turn 62, even if they are still collecting a paycheck. However, starting Social Security benefits at age 62 is four to five years before full retirement age , which is when you can expect to receive a full, unreduced benefit.
If you begin taking Social Security benefits early, each there is month between your start date and your full retirement age permanently reduces your monthly payment by about half a percent.
In addition to seeing a permanent reduction in monthly benefit, if you are still working while collecting early benefits, you may see some of your Social Security payments withheld because of something called the earnings test. If you havent reached full retirement age, you will see $1 of your Social Security benefits withheld for every $2 over $18,960 that you earn. This test changes to a withholding of $1 in benefits for every $3 you earn above $50,520 up to the month of your birthday during the year you reach full retirement age.
Take a 63-year-old beneficiary who is earning $35,000 per year while also taking Social Security benefits. Their annual income is $16,040 above the earnings test limit, which means $8,020 will be withheld from their Social Security benefits.
Once you reach the Social Security full retirement age, you can work as much as youd like without imperiling your monthly benefit, though youll still be on the hook for income taxes.
Delay Starting To Collect Benefits
Each of us can start collecting our benefits as early as age 62 and as late as age 70. For each of us, there’s a full retirement age in between, at which we can collect the full benefits to which we’re entitled, based on our earnings history. If you start collecting your benefit checks before your full retirement age, they will be smaller . Conversely, for each year beyond your full retirement age that you delay , they’ll grow about 8% bigger .
The table below shows how much of your full benefits you’ll receive, depending on when you start collecting:
Start Collecting at:
Data source: Social Security Administration.
Not everyone can afford to delay some will simply need that retirement income as soon as they can get it, perhaps due to an unexpected job loss or health setback. But if you can delay, it will boost the size of your benefit checks.
The Bottom Line On When To Claim Your Social Security
Every individuals and couples needs are different when it comes to claiming Social Security. But maybe waiting until age 70 is something we should seriously consider.
Even if youve already filed, you may find that youre eligible for a do-over. You can withdraw your application for up to 12 months after you file, and reapply later. But you only get one do-over. If it makes sense for you to do this, youll have to pay back the Social Security benefits that you received, and in many cases your IRA or 401 may be where you have to get that money.
If you arent sure which Social Security claiming strategy is the best fit for your needs and goals, talk to a financial adviser who is knowledgeable about retirement income planning and, specifically, Social Security benefits. An experienced professional can lay out all your options and help you work out a timeline.
Kim Franke-Folstad contributed to this article.
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Coordinate With Your Spouse
Finally, if you’re , coordinating with your spouse can deliver bigger benefits, too.
Imagine this scenario: You’re married, and your spouse has generally earned much more than you. You both start collecting benefits as soon as you can, at age 62. You collect, say, $1,800 per month, and your spouse collects, say, $2,300. If your spouse dies first, your household can no longer collect both checks instead, you get the greater of the two, so your benefit rises to $2,300.
But if your spouse had been able to delay starting to collect until age 70, that $2,300 check could have grown by 24% into a $2,850 one. Strategizing with a spouse can be a powerful income-maximizing move.
It’s well worth taking a little time to learn more about Social Security, because it’s likely to provide a meaningful chunk of your retirement income, and it’s worth getting as much out of the program as you can.
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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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Waiting To Receive Social Security Benefits
If you delay receiving Social Security benefits until after your full retirement age, you will get benefit credits that increase the amount you receive once you do start. But that increase stops once you’ve reached age 70.
For example, if your full retirement age is 67, you would receive an 8% increase each year that you postpone receiving your benefits until you reach age 70. However, if you delay receiving your benefits, you must still apply for Medicare before age 65. You can start the process during your initial enrollment period. This period lasts seven months: three months before the month of your 65th birthday, the month of your 65th birthday and through the third month after your 65th birthday.
If you miss your initial enrollment or don’t enroll in Medicare Part B because you have coverage through work or a spouse, you may have opportunities to enroll later.
If you don’t sign up for Medicare Part B during your initial enrollment period and don’t have other coverage, you could be charged a penalty of 10% for each year you delayed enrollment once you do enroll.
What If I Take Benefits Early
If you choose to receive your Social Security check up to 36 months before your full retirement age, be aware that your benefit is permanently reduced by five-ninths of 1% for each month.
If you start more than 36 months before your full retirement age, the benefit is further reduced by five-twelfths of 1% per month, for the rest of retirement.
For example, let’s assume that you stop working at age 62. If your full retirement age is 66 and 2 months you elect to start benefits at age 62, the reduced benefit calculation is based on 50 months. This means that the reduction for the first 36 months is 20% and 5.83% for the remaining 14 months. Overall, your benefits would be permanently reduced by 25.83%.
Effect of early retirement on benefits
1.Represents Full Retirement Age based on DOB Jan. 2, 1955
2.PIA = The primary insurance amount is the basis for benefits that are paid to an individual
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Social Security Survivor Benefits For Spouses
Surviving spouses can receive benefits based on the benefit amount that the deceased was receiving from Social Security at the time of death.
- A surviving spouse can get reduced benefits as early as age 60. Full benefits are available at full retirement age. Benefits are for life.
- A surviving spouse who has a disability can collect benefits as early as age 50. The benefit begins upon the death of the retiree and continues until the surviving spouse is age 65. At that point, they are eligible for the aged benefit.
- Surviving spouses can get benefits at any age if they take care of their spouses child who is under age 16 or disabled and receives Social Security benefits.
- Surviving divorced spouses who are age 60 or older can get survivor benefits if the marriage lasted at least 10 years. Divorced spouses dont have to meet the length-of-marriage rule if they take care of the former spouses child who is younger than age 16 or disabled.
Verify That Your Earnings History Is Accurate
Your Social Security statement should have a record of your annual income. Check it for accuracy before claiming benefits and, ideally, check it regularly.
The amount of your monthly retirement benefit is based on your top 35 years of earnings. So, if theres an error in your earnings record, your monthly payment could suffer for it.
For example, say an employer fails to correctly report your earnings for even one year. Your benefit upon retiring could be around $100 less every month, according to the SSA.
If you find an error in your earnings record, follow the SSAs directions for correcting it.
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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|
|66 + 2 months for each year past 1954|
|1960 and later||67|
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 birth||If you file at 62, benefit reduced by:||A $1,000 check becomes|
Social Security Disability Benefits
The final category of Social Security benefits applies if you suffer an injury or illness that leaves you unable to work. These benefits are paid from the Disability Insurance Trust Fund.
A person qualifies for disability benefits after working long enough to be eligible for Social Security before becoming disabled. You must meet certain criteria defined by the SSA, including severe disabilitya disability that has lasted or is expected to last at least one year or result in death, with the person deemed unable to perform any work. The benefit begins six full months after the onset of the disability. This benefit is for life unless the SSA determines that you no longer qualify.
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Doing A Breakeven Analysis And Other Ways To Decide How Soon To Start
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A Tea Reader: Living Life One Cup at a Time
If youre about to retire, you may be wondering whether you should start claiming your hard-earned Social Security benefits now. Here are a few key factors to consider in making that decision.
Does Working After Full Retirement Age Increase Social Security Benefits
Working after full retirement age could increase your Social Security benefits. Your benefits are based on average wages over your 35 highest-earning years .
Even after you’ve reached full retirement age, and even if you’ve already claimed benefits, the Social Security Administration continues to recalculate your average annual wage to account for new income. If your earnings after FRA are higher than previous years and raise your average wage for your 35 top-earning years, your benefits could rise accordingly.
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Social Security Retirement Age : If You Are A Widow/widower
If you are a widow or widower, you can receive Social Security retirement benefits as early as 60. If you have not reached your full retirement age, and you are still working and earn more than the earnings limit, your benefits will be reduced. Once you reach full retirement age, no more reductions will apply, regardless of how much you work and earn. Those working will want to consider waiting until their full retirement age to begin widow/widower benefits.
One option available to widows/widowers is to file a restricted application, which means you can begin one type of benefit, such as a survivor benefit then when you reach 70, you can switch over to your retirement benefit amount if it would be larger.
No : Your Monthly Benefit Will Be Permanently Reduced
Because you’ll be collecting money for longer, your monthly benefit will be well below what you’d collect by waiting until your full retirement age . If you were born in 1960 or later, you’ll get 30% less than what you’d get with the same earnings record by waiting until your FRA.
If you thought your monthly benefit would be $1,563 — about the average that retirees currently receive — your actual benefit would be closer to $1,094. That’s a substantial reduction, and if you’re not planning on it, it could make a material difference in what you’ll be able to afford during retirement.
Medicare Enrollment Can Be Impacted By Social Security Benefits
Depending on your situation, you with either need to enroll in Medicare at age 65 or you may be able to delay. If you continue to work past age 65 and have creditable employer coverage , you can likely delay enrolling in Medicare until you lose that employer coverage. In most cases, people turning 65 will need to get Medicare during their 7-month Initial Enrollment Period to avoid financial penalties for enrolling late. Your IEP begins 3 months before the month of your 65th birthday and ends 3 months after.
Social Security benefits fit in the Medicare enrollment journey in one special way. If you are receiving either Social Security benefits for retirement or for disability, or Railroad Retirement Board benefits, you will be automatically enrolled in Medicare Part A and Part B when you first become eligible.
A Reader Poses A Question Thats Trickier Than It Seems
One of the things I think Im pretty good at is answering questions about federal retirement, but a recent email about Social Security left me stumpedtwice.
Greg, a longtime federal employee, wrote to me:
Social Security benefits max out at age 70, I get that. But filing too soon loses a portion of the maximum amount, and filing too late loses a whole monthly benefit. I have searched all over, and nowhere can I find out exactly what the best date is to request benefits begin. My wife reaches age 70 in the middle of April and we were wondering how to maximize her benefit by selecting the best starting date.
I thought Greg was asking a very common question: When is the best time to file for Social Security retirement? So I replied as follows:
There are a lot of theories about claiming Social Security benefits. Social Security has a fact sheet on this question as well. There are many factors that can influence the best time for you:
- Are you married or single?
- What is the age difference between you and spouse, if married.
- What is the income difference between you and your spouse, if married.
- Do you have children age 18 or younger?
- Are you widowed?
- Are you still working or fully retired?
- Do you have other sources of retirement income that could bridge the time between retirement and a later application for Social Security?
- Do you have good health and family history that shows longevity?
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Full Retirement Age Affects The Amount Of Your Benefits And More
Full retirement age is the age at which you can claim your standard Social Security benefit, or your primary insurance amount , from Social Security. Your PIA is the standard amount you can expect to receive based on your inflation-adjusted average wages earned throughout your career. Full retirement age is 66 for those born in 1954 and 67 for those born in 1960 or later — it varies depending on your birth year.
It is important to know your full retirement age, as it affects when you can claim Social Security without reducing your benefits, the amount of delayed retirement credits you can earn in order to raise your benefits, and how much you can earn from working while receiving Social Security without forfeiting any of your benefits.