Sunday, May 15, 2022

When Do Social Security Benefits Begin

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Waiting To Receive Social Security Benefits

When To Start Taking Social Security Benefits

If you delay receiving Social Security benefits until after 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, called open enrollment, three months before the month of your 65th birthday. Your open enrollment lasts for three months after the month you turn 65.

If you miss your open enrollment, or you don’t enroll in Medicare Part B because you have coverage through work or a spouse, you’ll have opportunities to enroll later.

If you don’t sign up for Medicare Part B during open enrollment and you don’t have other coverage, you could be charged a penalty of 10% for each year you delayed enrollment once you do enroll.

If You’re Not Sure Why You Received A Payment

Contact the authorizing agency directly to find out why they sent the payment. You may be able to find the authorizing agency in the memo line of the check. View this diagram of a sample Treasury check to help you locate the authorizing agency contact information on your own check. Scroll about half way down the page to see the diagram.;

If you’re unable to find which;agency authorized the payment, .;They;can help you determine which government agency you need to contact. To find which;RFC;you need to call, look for its city and state at the top;center of the check.;

Use the Treasury Check Verification System to verify that;the check is legitmate and issued by the;;government. ;

How Will My Retirement Benefits Be Taxed

Approximately one-third of people who collect Social Security benefits are required to pay income taxes on these benefits. Individuals with higher total incomes must include up to 85% of their benefits as income for federal income tax purposes, designated by special step-rate thresholds. However, the taxation thresholds for your benefits arent currently indexed for inflation.

Read Also: How To Start Social Security Retirement

What Happens If You Claim After Your Fra

If you wait until youre 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. You also need to weigh in some other factors, including your expected longevity and whether you plan to file for spousal benefits. You will also need to consider the tax, investment opportunity, and health coverage implications.

You Could Help Keep Your Tax Bill Lower

When Do Social Security Benefits Start and End?

Many people dont realize that they could end up paying federal income taxes on as much as 85% of their Social Security benefits.

If you file a federal tax return as an individual;and your;provisional income is between $25,000 and $34,000, then up to 50% of your benefits may be federally taxable as earned income. If your provisional income is more than $34,000, you may have to pay federal income taxes on up to 85% of your Social Security benefits.

If you file a joint return and you and your spouse have a provisional income between $32,000 and $44,000, up to 50% of your Social Security benefits could be taxed. If your provisional income with your spouse is more than $44,000, up to 85% of your Social Security benefits may be taxable.

If you dont have much taxable income in retirement, you may not have to pay any federal taxes on your Social Security benefits. But if youre like many Baby Boomers you may have a hefty amount of your retirement savings in tax-deferred IRAs or 401s and the federal income taxes on those savings could be substantial.

To help with that, you may be able to take distributions from your tax-deferred accounts , etc.) now, and perform some Roth conversions, and/or perhaps conversions to other vehicles that can provide you with tax-free income, such as life insurance, so that Social Security benefits later may not be taxed at all by the federal government.

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When Can I Start Collecting Social Security

The minimum age to claim benefits is 62. If you are turning 62 and need the income from Social Security to support yourself, then you can start claiming your benefits now. However, if you have enough other income to keep you going until you are older, then you may want to delay to increase the size of your monthly benefit.

How Do You Apply For Benefits

When you are ready to apply for Social Security benefits, you can apply in a number of ways. For individuals living in the United States, applications can be taken over the phone, online or by visiting a local Social Security office.

Individuals who do not reside within the United States or any of its territories must contact the nearest U.S. Social Security office, Embassy or consulate.

Read Also: How Is Social Security Pension Calculated

Taxes On Your Benefits

Your Social Security benefits may be partially taxable if your combined income exceeds certain thresholds. Regardless of how much you make, the first 15% of your benefits are not taxed.

The SSA defines combined income using this formula:

  • Your adjusted gross income + nontaxable interest + half of your Social Security benefits = your combined income

If you file your federal tax return as an individual and your combined income is $25,000 to $34,000, then you may have to pay income tax on up to 50% of your benefits. If your combined income is more than $34,000, then you may have to pay tax on up to 85% of your benefits.

If youre married, filing a joint return, and your combined income is $32,000 to $44,000, then you may have to pay income tax on up to 50% of your benefits. If your combined income is more than $44,000, then you may have to pay tax on up to 85% of your benefits.

Work With A Specialized Financial Advisor

When Should You Start Taking Care Of Social Security Benefit

There are over 500 possible ways to claim your benefit, and most Americans claim with very little thought into this decision that represents on average 40 percent of their retirement income, Henderson says. Only 4 percent of people in the U.S. choose the optimum claiming strategy that would give them the most money over their life expectancy.

For this reason, it could make sense to work with a financial advisor who specializes in claiming Social Security benefits, especially if you have an unusual situation.

Social Security Administration employees are not allowed to give advice, and the majority of financial advisors are not helping with this benefit, because they are not educated in the area or because they are not compensated, Henderson says.

Because of the programs complexity a result of trying to help people in many different situations you may need specialized advice to find the best solution for you. And that could pay off handsomely, even though it could cost you a little bit of money upfront.

Heres how to find a financial advisor who will work in your best interest and what to look for.

Also Check: How Do You Check Your Social Security Status

When Your Benefits Start

Generally, if your application for Social Security Disability Insurance is approved, you must wait five months before you can receive your first SSDI benefit payment. This means you would receive your first payment in the sixth full month after the date we find that your disability began.

Example: Your disability began on June 15, 2020 and you applied on July 1, 2020. Your first benefit would be paid for the month of December 2020, the sixth full month of disability.

However, there is no waiting period if your disability results from amyotrophic lateral sclerosis and you are approved for SSDI benefits on or after July 23, 2020.

Example: We found that your disability began on November 3, 2020 and you applied on January 11, 2021. We would pay your first benefit for the month of December 2020, the first full month of disability.

We pay SSDI benefits in the month following the month for which they are due. This means that the benefit due for December 2020 would be paid to you in January 2021, and so on.

Why You Need To Sign Up For Electronic Payment

As of March 1, 2013, Social Security;stopped;mailing paper checks. Beneficiaries are now required to receive their monthly payments electronically.

There are two ways you can receive your benefits:

Direct deposit of your disability payment: This option deposits your payment into your bank account on the day you are paid.

You need a checking or savings account with a bank or credit union to use this option.

Direct Express Debit Card: If you do not sign up for direct deposit, your benefits will be paid to you via;Direct Express debit card;option.

The Direct Express debit card works anywhere Debit Mastercard are accepted.

You can also use your Direct Express debit card to get cash back at the grocery store or to purchase money orders at the post office.

Also Check: How To Check Social Security Number Online

Receiving Social Security Payments

Social Security benefits are only paid out electronically; you will not receive a Social Security check in the mail. You can either receive a direct deposit into your bank account or opt for a prepaid debit card. When you apply to receive your Social Security benefits, you will have the chance to provide your account number and the routing number of your bank or credit union.

The Source Ofand Solution Tothe Problem

When To Begin Your Retiree Social Security Benefits

When the current Social Security formula was put in place in 1977, no provision was made for the contingency that economic conditions would be so dire that average wages would fall in any given year. This problem first surfaced in 2009 during the Great Recession. The AWI, however, fell by a relatively small amount, and policymakers chose not to do anything about it. As a result of the COVID-19 pandemic, however, the decline in the AWI is likely to be about four times as big now as it was during the Great Recession.

There is ample precedent for fixing this problem. The first precedent concerns Social Security cost-of-living allowances . As mentioned above, payments in years after beneficiaries first year of retirement are indexed to inflation using a version of the consumer price index . However, under the law, if prices fall in any year, benefits are not adjusted downward; rather, they remain the same. The second precedent concerns the Social Security contribution and benefit base, also known as the taxable maximum. The taxable maximum is the dollar amount of annual earnings above which the Social Security payroll tax does not apply. The taxable maximum is indexed to the AWIbut like COLAs, it is never adjusted downward.

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Getting A Social Security Number For A New Baby

The easiest way to get a Social Security number for your child is at the hospital after they are born when you apply for your childs birth certificate. If you wait to apply for a number at a Social Security office, there may be delays while SSA verifies your childs birth certificate.

;Your child will need their own Social Security number so you can:

  • Claim your child as a dependent on your income tax return
  • Open a bank account in their name
  • Get medical coverage for them
  • Apply for government services for them

Keep your Social Security card in a safe place to protect yourself from identity theft.;

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 Do Benefits Work And How Can I Qualify

While you work, you pay Social Security taxes. This tax money goes into a trust fund that pays benefits to:

  • Those who are currently retired

  • To people with disabilities

  • To the surviving spouses and children of workers who have died

Each year you work, youll get credits to help you become eligible for benefits when its time for you to retire. Find all the benefits Social Security Administration offers.

There are four main types of benefits that the SSA offers:

  • Learn about earning limits if you plan to work while receiving Social Security benefits

How Long Does It Take To Process Social Security Retirement Benefits

When You Should Start Drawing On Social Security

If you are considering retiring from the workforce in the near future, one of the most important things you’ll need to know is how long it will take for you to start receiving your Social Security retirement benefits after you apply for them. While it generally takes approximately six weeks for an application to be processed, it is advisable for you to initiate the process three months before you want to receive your first benefit payment.

Tips

  • It usually takes around six weeks to process your Social Security application for retirement benefits, but applying a few months before you need your payments is recommended.

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Tax On Social Security Benefits

You may have to pay taxes on your Social Security benefit, depending on your income level. If your retirement income is over a certain amount, then part of your Social Security benefits may be taxable.

Single-filers with an income between $25,000 and $34,000 will have to pay income tax on up to 50% of their benefits. If they make more than $34,000, then up to 85% of the benefits may be taxable.

Keep this in mind when filing your tax return. You may also be able to withhold your taxes from your Social Security benefits payments, so you arenât stuck with a large tax bill on Tax Day. Check your SSA account online or visit your local Social Security office for more information.

Make Payments To The Federal Government

Learn how to use Pay.gov to make secure, electronic payments to government agencies from your checking or savings account. You can use the online service for VA medical care copayments, U.S. district court tickets, U.S. Coast Guard;merchant mariner user fee payments, and more.

If you need help, contact Pay.gov customer service.;

Also Check: How Do I Apply For Social Security Disability Online

Why You Can Trust Bankrate

Founded in 1976, Bankrate has a long track record of helping people make smart financial choices. Weve maintained this reputation for over four decades by demystifying the financial decision-making process and giving people confidence in which actions to take next.

Bankrate follows a strict editorial policy, so you can trust that were putting your interests first. All of our content is authored by highly qualified professionals and edited by subject matter experts, who ensure everything we publish is objective, accurate and trustworthy.

Our reporters and editors focus on the points consumers care about most how to save for retirement, understanding the types of accounts, how to choose investments and more so you can feel confident when planning for your future.

How Payments Are Paid

Key Considerations as You Start Receiving Social Security ...

There are two primary ways to receive your Social Security benefit checks:;

  • Direct deposit to your bank account, or;
  • Direct Express debit card. In 2013, the Social Security Administration stopped mailing out benefit checks in order to reduce expenses.
  • To set up a direct deposit you have three options:

    • Configure through My profile tab in your online Social Security account
    • Ask your bank to do it

    If you choose to receive through a Direct Express debit card, your benefits will be placed directly onto the card. From there, you can withdraw cash, make purchases or pay bills. To sign up, call Direct Express at 800-333-1795.

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    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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