Monday, May 16, 2022

When Do You Draw Social Security

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Do You Have To Pay Taxes On Social Security Benefits

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

Finding Information About Federal Taxes. If youre filing as an individual with a combined income between $25,000 and $34,000, you may be taxed up to 50 percent of your benefits. Single filers earning more than $34,000 a year in taxable income may have up to 85 percent of their Social Security benefits taxed.

Children Can Also Collect Social Security Benefits

Minor children of Social Security beneficiaries can be eligible for benefits. Children up to age 18 and disabled children older than 18 may be able to receive up to half of a parent’s Social Security benefit. The disability must have occurred before the age of 22. The adult child can continue collecting the benefit even after the parent has died, as long as the disability prevents them from working.

Taxation And Roth Iras

These rules apply to income earned from traditional IRAs and 401 plans. But, these rules do not apply to income earned from Roth IRAs. You pay taxes on the money you put into a Roth IRA at the time you make those contributions. So, you don’t pay any when you withdraw the money.

Roth IRA withdrawals don’t raise your combined income. They won’t increase your chance of paying taxes on your Social Security.

Another benefit of a Roth IRA is that there’s no set schedule for withdrawing your money. Traditional IRAs and 401 plans require that you begin withdrawals after you reach the age of 70½ if you attained this age before January 1, 2020. Otherwise, you have until age 72.

It’s worth talking to your financial advisor to find out if a Roth IRA is right for you if you’re concerned about the burden of taxes after your retirement. It will depend on the specifics of your situation.

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Can You Collect Social Security And Disability

Wondering whether you can collect Social Security and Social Security Disability Insurance at the same time? The short answer is probably not. The long answer, however, is maybe. Social Security and SSDI serve similar purposes, but the requirements vary for each. Social Security is for those whove reached early or full retirement age, while disability insurance typically serves younger individuals who cannot work due to serious medical conditions. However, an exception may apply. We take a closer look in this guide.

A financial advisor can provide professional insight into the world of retirement planning. Find a financial advisortoday.

You Can Claim Social Security Benefits Earned By Your Ex

Where Do I Get My Social Security Card / My Social ...

Just because you’re divorced doesn’t mean you’ve lost the ability to get a Social Security benefit based on your former spouse’s earnings. You can receive a benefit based on his or her record instead of a benefit based on your own work record if you were married at least 10 years, you are 62 or older, and you are single.

Like a regular spousal benefit, you can get up to 50% of an ex-spouse’s benefit — less if you claim before full retirement age. And the beauty of it is that your ex never needs to know because you apply for the benefit directly through the Social Security Administration. Taking a benefit on your ex-spouse’s record has no effect on his or her benefit or the benefit of your ex’s new spouse. And unlike a regular spousal benefit, if your ex qualifies for benefits but has yet to apply, you can still start collecting Social Security based on the ex’s record, though you must have been divorced for at least two years.

Note: Ex-spouses can also take a survivor benefit if their ex died after the divorce, and, like any survivor benefit, it will be worth up to 100% of what the ex-spouse received. If you remarry after age 60, you are still eligible for the survivor benefit.

A claiming strategy if youre divorced: Exes at full retirement age who were born on January 1, 1954, or earlier can apply to restrict their application to a spousal benefit while letting their own benefit grow.

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Can Your 401 Impact Your Social Security Benefits

    Thomas J Catalano is a CFP and Registered Investment Adviser with the state of South Carolina, where he launched his own financial advisory firm in 2018. Thomas’ experience gives him expertise in a variety of areas including investments, retirement, insurance, and financial planning.

      Kirsten Rohrs Schmitt is an accomplished professional editor, writer, proofreader, and fact-checker. She has expertise in finance, investing, real estate, and world history. Throughout her career, she has written and edited content for numerous consumer magazines and websites, crafted resumes and social media content for business owners, and created collateral for academia and nonprofits. Kirsten is also the founder and director of Your Best Edit find her on LinkedIn and Facebook.

      The income you receive from your 401 or other qualified retirement plan does not affect the amount of Social Security retirement benefits you receive each month. However, you may be required to pay taxes on some or all of your benefits if your annual income exceeds a certain thresholdand your 401 distributions can cause it to do that.

      Costs Of The Solution

      Two issues that are likely to arise in any discussion of fixing this problem are its cost to the Social Security trust fund and its cost to the federal budget. With regard to the cost to the Social Security trust fund, there are three ways to look at the issue.

      One way is to view the cost relative to costs in a world in which no pandemic had occurred. For example, the cost could be measured using the economic assumptions in the most recent Social Security trustees report , which were formulated before the pandemic began. From this perspective, the cost would be zero because the legislative change would restore the world of Social Security benefits to what it would have looked like had there been no pandemic.

      A second way of looking at the issue is to view the cost of the change relative to costs in a world that reflected economic assumptions indicative of the economic recession caused by the pandemic. From this viewpoint, there would be a cost associated with fixing the problem. For example, the chief actuary of the SSA estimates that if the AWI in 2020 were to fall 5.9 percent below its 2019 level, the AWI adjustments proposed by Chairman Larson would cost $90 billion in present-value dollars for the 75-year period from 2020 through 2094about 0.02 percent of taxable payroll over that period. . The cost over the 10-year period from 2020 to 2029 would be about $21 billion in nominal dollars.

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      Can I Qualify For Ssi While Collecting Social Security Retirement Benefits

      While you cannot collect Social Security retirement and SSDI at the same time to increase your benefits beyond the full retirement amount, there is a program that may allow you to collect additional income.

      SSI, which stands for Supplemental Security Income, is a Social Security program that helps seniors and those with a disability who have an extremely low income or limited assets. To qualify for SSI, you need to meet strict income qualifications and have only a minimum amount of resources. Resources, as the SSA defines the term, can be anything that can be turned into cash, such as:

      • Bank accounts, stocks, or U.S. savings bonds
      • Land

      Try This Life Expectancy Calculator For Social Security

      When to Pull From Your IRA Before Claiming Social Security

      Retirement benefit calculations are based on extensive actuarial studies and data. As a service to the public, the Social Security Administration has developed a simple Life Expectancy Calculator that allows you to plug in your gender and date of birth to get a rough estimate of how long you may live.

      Knowing this information may help you in deciding when the right time is to apply for retirement benefits.

      To use the Calculator, go to

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      Theres An Annual Social Security Cost

      One of the best features of Social Security benefits is that the government adjusts the benefits each year based on inflation. This is called a cost-of-living adjustment, or COLA, and helps your payments keep up with increasing living expenses. The Social Security COLA is quite valuable its the equivalent of buying inflation protection on a private annuity, which can get expensive.

      Because the COLA is calculated based on changes in a federal consumer price index, the size of the COLA depends largely on broad inflation levels determined by the government. In 2021, Social Security beneficiaries saw a 1.3% COLA in their monthly Social Security benefits.

      The Kiplinger Letter predicted in September that the COLA for 2022 could be 6%, which would be the largest adjustment since 1982. The final COLA for 2022 will be announced on Oct. 13.

      Heres what COLAs have been in other recent years:

      • 2009: 5.8%
      • 2021: 1.3%

      Who Is Eligible For Social Security Retirement Benefits

      The U.S. Congress passed the 1935 Social Security Act as a way to supplement retirement earnings for primary working Americans. The original law also included the nations first unemployment insurance program as well as several health and welfare programs. Shortly thereafter, the law was changed to add survivor benefits for spouses and children, and in 1956 disability benefits were also added.

      The Social Security Administration now serves 60 million Americans who will receive $870 billion in benefits in 2015.

      The administration of such a large benefits program can be complicated at times, with numerous special instances, exceptions and nuances that can impact how benefits are disbursed to recipients.

      This guide will introduce applicants to the basics of applying for Social Security retirement benefits and answer many of the common questions that arise when first considering to apply for benefits.

      It will also address many special circumstances that can arise involving spouses and children, specific circumstances regarding timing, amounts, and maximizing benefits while also offering a comprehensive list of resources that may prove valuable throughout the Social Security retirement benefits process.

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      The Advantages Of Disability Retirement In California

      Experiencing any type of injury or disability can be devastating, and one that permanently prevents you from working can put your financial future at risk. But depending on your injury, California has both state and federal regulations that can help you receive a certain disability retirement amount, allowing you to meet your financial expenses without having to worry about your inability to work.

      What Is The Future Of Social Security

      How Old Do You Need to Be to Collect 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.

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      The Facts On Social Security Disability Insurance And Supplemental Security Income For Workers With Disabilities

      Endnotes and citations are available in the PDF and Scribd versions.

      Nearly one out of every six working-age Americans29.5 million peoplehas a disability, making them much more likely to experience economic hardship than people without disabilities. Many people with disabilities are able to work, although they face greater challenges finding work than people without disabilities. But many individuals with severe and long-lasting disabilities have no or only limited capacity to work and are particularly vulnerable to economic hardship.

      For roughly 12 million people with disabilities, Social Security Disability Insurance and Supplemental Security Income, both core components of our nations Social Security system, provide critical lifelines. The modest but vital assistance that Disability Insurance and Supplemental Security provide makes it possible for individuals with severe disabilities and health conditions to live independently, keep a roof over their heads and food on the table, and pay for needed, often life-sustaining medications and other basic expenses.

      This issue brief answers some of the common questions about Disability Insurance and Supplemental Security. Our focus in this brief is on nonelderly adults with severe disabilities. It is important to note, however, that Supplemental Security also provides vital support to some 1.2 million children with severe disabilities, as well as more than 2 million low-income seniors.

      Survivor And Death Benefits

      Wage earners depend on Social Security retirement benefits to help meet financial needs when they stop working, but sometimes these earners can pass away early and unexpectedly. When workers pay into Social Security, a majority goes to fund disability and retirement costs, but a portion of their taxes go toward survivors benefits as well.

      When a worker passes away, some family members may be eligible for survivors benefits if the worker earned enough credits during their working lifetime. Eligible family members include widowed spouses who are 60 or older, 50 or older if they are disabled, or any age if caring for a child who is under 16 years old. Children of deceased workers are also eligible if they are not married and under 18 years old, or under 19 years old but still in school. If youre divorced and you or your spouse pass away, the surviving spouse could be eligible for a widows benefit as well.

      If a worker has enough work credits when they pass away, Social Security will also make a one-time payment of $255. This payment can be made only if the spouse or child meet certain specified requirements.

      To apply for survivors benefits, Social Security will need the following, either original copies or certified copies, from the issuing agency.

    • Proof of death from a funeral home or a death certificate
    • Social Security numbers for the applicant and the deceased person
    • The applicants birth certificate
    • Dependent childrens Social Security numbers and birth certificates
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      Do I Qualify For The Exception To This Rule Can I Draw Both Ssdi And Retirement

      There is one exception that allows qualified individuals to draw both retirement and SSDI benefits at the same time, but this is rare and still does not allow them to collect more than their full retirement benefit.

      This occurs when someone opts for early retirement between age 62 and their full retirement age but is then approved for SSDI benefits. Some people set themselves up for this by filing for early retirement after an injury or illness caused them to have to quit work. They can begin receiving early retirement to help them cover bills until their SSDI claim receives approval and the waiting period for those benefits expires.

      Once this happens, they can begin receiving additional money from the SSA each month on top of their early retirement benefits. This will bring them to their full retirement benefit amount. They are also most likely qualified for retroactive benefits, which will bring them to their full retirement amount for any month they suffered a disability but were not yet approved for SSDI.

      Why Not Claim Early Rather Than Draw Down An Ira And Other Savings

      When Can My Spouse Collect Social Security Benefits?

      Its conventional wisdom to delay tapping an individual retirement account, instead enabling it to grow tax deferred. Roughly 40 percent of beneficiaries claim reduced Social Security benefits at 62 or 63.

      But many researchers say reversing the order living on retirement savings in the early years and holding off on collecting benefits is likely to increase monthly income over a lifetime.

      One reason, experts say, is the roughly 77 percent boost in benefits a beneficiary receives by claiming at 70 rather than at 62.

      Another is the difference in how I.R.A. withdrawals and Social Security benefits are taxed. Individuals pay the ordinary federal income tax rate on all I.R.A. withdrawals. But just 85 percent, 50 percent or none of their Social Security benefits are taxed.

      The amount subject to tax depends on your provisional income, which includes half of benefits and 100 percent of nonbenefit income. The more I.R.A. income, the more likely you are to pay at a higher marginal rate and be taxed at the 85 percent threshold.

      With this formula in mind, a new retiree should start I.R.A. withdrawals early, when the marginal rate is likely lower, said Laurence Kotlikoff, an economics professor at Boston University.

      Consider a person who is due a $2,200 monthly Social Security benefit at full retirement age. Her $500,000 I.R.A. and $200,000 in other savings are expected to grow at an inflation-adjusted 2 percent a year.

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      Should You Count On The Maximum Social Security Benefit

      Getting the biggest monthly check out of Social Security is a fine goal. But even if you have a high income, you shouldn’t rely on getting the maximum benefit.

      Even having a year or two when your earnings fall short can reduce your payments. Also, many seniors have to leave the workforce earlier than they anticipated. Health problems, layoffs, age discrimination, and caregiving responsibilities often disrupt plans to keep working. In any of these situations, holding out until 70 may not be realistic.

      Waiting to start benefits can certainly pay off– but it’s essential that you start saving for retirement early and continue to do so throughout your career. Retirement will be much easier if you’re not counting on squeezing every last penny out of Social Security.

      The $16,728 Social Security bonus most retirees completely overlook

      If you’re like most Americans, you’re a few years behind on your retirement savings. But a handful of little-known “Social Security secrets” could help ensure a boost in your retirement income. For example: one easy trick could pay you as much as $16,728 more… each year! Once you learn how to maximize your Social Security benefits, we think you could retire confidently with the peace of mind we’re all after. Simply click here to discover how to learn more about these strategies.

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