Thursday, May 19, 2022

When Will I Be Able To Collect Social Security

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There Are A Variety Of Factors Which Will Affect The Status Of Your Residency With The United States You Will Either Be Regarded As A Resident Or A Non

I’m Not Able To Receive Social Security, Because I’m A Young Retiree. I Still Have To Work

American Citizens who make the decision to renounce their US Citizenship are regarded by the United States as all other aliens, or Non-US Citizens. You will fall under the classification of a non-resident alien or you will be regarded as a resident alien. You will have resident alien status if you maintain official permanent residency. If you do not have a permanent residency status, you must be able to declare substantial presence inside the US. In most cases, a substantial presence is obtained if you are in the US for 31 days out of a given year or you are in the US for a period of six months out of a time span of three years. Meeting the conditions of the substantial presence guidelines may not be enough to be considered a resident alien in the event that the government decides that you maintain more ties to another country than you do to the United States.

Factors That Affect Social Security Benefits

The math seems to say that everyone should wait until age 70 to reap the best benefits, but this isnt always the case. There are times when it might make sense to start collecting earlier. If, for example, you are in poor health or if the family breadwinner is ill and can no longer work, collecting before your full retirement age could help prevent debt from mounting up.

Your marital status also plays a factor. If youre single and in poor health, you could end up using your savings to pay for medical bills between the ages of 66 and 70. In this case, you might be better off collecting Social Security benefits at a lower rate than holding out for the higher payments youd receive at age 70.

If, however, youre single, in good health and either still working or have plenty of savings, consider waiting until age 70 in order to benefit from the higher payments.

With married couples, it could be best for the spouse who earns the most money to hold off until 70, while the spouse who makes less starts collecting at 62. This approach will ensure that when one of you passes away, the surviving spouse will receive the higher benefitsgenerally the amount their spouse would have received at age 70, even if the spouse died before that age.

For more help with retirement planning, consider contacting a Certified Financial Planner. They can help you ensure youre maximizing your Social Security benefits and answer any questions you have about your other assets.

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.

Also Check: How Much Will You Get In Social Security

Should I File For Divorce Before My Spouse Starts Receiving Benefits

When you begin receiving Social Security benefits, the SSA will calculate your benefits both as a worker and as an ex-spouse or widow.

If your ex-spouse is 62 or older and has not applied for benefits, you may start receiving benefits if you have been divorced for two or more years.

Otherwise, there is no advantage or disadvantage as to when you should file for divorce as it relates to Social Security benefits.

Keep in mind that you must have been married for 10 years or longer, you cant currently be married and must meet other qualifying conditions based on your personal circumstances.

Pro Tip:

The Source Ofand Solution Tothe Problem

Should Millionaires Be Able to Collect Social Security ...

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.

Also Check: My.social Security.gov

Do Green Card Holders Get Unemployment

Legal permanent residents, who hold a document called a green card, are allowed to live and work in the United States without sponsorship from an employer. Green card holders can also collect unemployment compensation the same way citizens do, provided they meet the same eligibility criteria as other workers.

Youll Get A Bigger Monthly Social Security Check If You Wait Until 70

Claiming Social Security before you reach full retirement age will result in a reduction in benefits as much as 25% to 30% less than you would have received if you had waited. That reduction is permanent.

Instead, if you wait to take your benefits until after your FRA, Social Security will add an 8% delayed retirement credit to your eventual monthly payout each year you hold off, up until age 70.

Thats a guaranteed return of 8% per year of deferral after your FRA, which could be more than you might receive with any other fixed products right now. Its definitely more than the cost of living adjustments that Social Security beneficiaries have been getting for the past decade, which have averaged about 1.5% a year.

Those COLA increases are not always enough to keep up with true inflation. And, when there is a COLA for Social Security, it may be coupled with a Medicare premium increase.

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How To Understand Social Security Retirement Benefits

Social Security, managed by the U.S. federal government, pays benefits to retirees. Social Security benefits are one part of a broader retirement plan. These benefits can supplement other sources of retirement income, such as 401s, individual retirement accounts or other retirement savings plans.

Can You Collect Social Security At 62 And Still Work

Best age to collect Social Security. Should I collect now or later?

Yes, you can begin collecting Social Security as early as age 62, and you can still work while you collect these benefits. However, there is a limit to the amount that you can make while receiving benefits. Most people working full time will earn more than the limit of $18,960, and their benefits will be reduced by $1 for every $2 that they earn over the limit. If working part-time or full-time and earning less than this limit, then there will be no reduction in benefits.

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Fact #: Social Security Is More Than Just A Retirement Program It Provides Important Life Insurance And Disability Insurance Protection As Well

Over 64 million people, or more than 1 in every 6 U.S. residents, collected Social Security benefits in June 2020. While older Americans make up about 4 in 5 beneficiaries, another one-fifth of beneficiaries received Social Security Disability Insurance or were young survivors of deceased workers.

In addition to Social Securitys retirement benefits, workers earn life insurance and SSDI protection by making Social Security payroll tax contributions:

  • About 96 percent of people aged 20-49 who worked in jobs covered by Social Security in 2019 have earned life insurance protection through Social Security.
  • For a young worker with average earnings, a spouse, and two children, thats equivalent to a life insurance policy with a face value of over $725,000 in 2018, according to Social Securitys actuaries.
  • About 89 percent of people aged 21-64 who worked in covered employment in 2019 are insured through Social Security in case of severe disability.

The risk of disability or premature death is greater than many realize. Some 6 percent of recent entrants to the labor force will die before reaching the full retirement age, and many more will become disabled.

Policy Basics: Top Ten Facts About Social Security

Social Security provides a foundation of income on which workers can build to plan for their retirement. It also provides valuable social insurance protection to workers who become disabled and to families whose breadwinner dies.

Eighty-five years after President Franklin Roosevelt signed the Social Security Act on August 14, 1935, Social Security remains one of the nations most successful, effective, and popular programs.

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Fact #: Social Security Lifts Millions Of Elderly Americans Out Of Poverty

Q &  A: How much of my Social Security benefit will my ...

Without Social Security benefits, about 4 in 10 Americans aged 65 and older would have incomes below the poverty line, all else being equal, according to official estimates based on the 2019 Current Population Survey. Social Security benefits lift more than 15 million elderly Americans out of poverty, these estimates show.

An important study that matches Census estimates to administrative data suggests that the official estimates overstate elderly reliance on Social Security. That study finds that in 2012, 3 in 10 elderly Americans would be poor without Social Security, and that the program lifted more than 10 million elderly Americans out of poverty.

No matter how it is measured, however, its clear that Social Security brings millions of elderly Americans out of poverty and dramatically reduces the elderly poverty rate.

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Fact #: Social Security Benefits Are Modest

Social Security benefits are much more modest than many people realize the average Social Security retirement benefit in June 2020 was about $1,514 a month, or about $18,170 a year. For someone who worked all of their adult life at average earnings and retires at age 65 in 2020, Social Security benefits replace about 40 percent of past earnings. This replacement rate will slip to about 35 percent for a medium earner retiring at 65 in the future, chiefly because the full retirement age, which has already risen to 66, and is gradually climbing to 67 over the 2017-2022 period.

The average Social Security retirement benefit in June 2020 was $1,514 a month, or about $18,170 a year.

Moreover, most retirees enroll in Medicares Supplementary Medical Insurance and have Part B premiums deducted from their Social Security checks. As health care costs continue to outpace general inflation, those premiums will take a bigger bite out of their checks.

Social Security benefits are modest by international standards, too. The United States ranks just outside the bottom third of developed countries in the percentage of an average workers earnings replaced by the public pension system.

Social Security lifted 1.5 million children out of poverty in 2018, as the chart shows.

Will My Social Security Benefits Be Reduced If I Work

A worker who claims benefits before full retirement age may run into the earnings limit, in which Social Security temporarily withholds $1 in benefits for every $2 in earnings above a certain amount in 2021, the limit is $18,960.

And though a person may need benefits to supplement low earnings, the downside of permanently reduced benefits also exists if you claim early, whether or not you exceed the earnings limit, Ms. Floyd said.

A working widow who collects a survivor benefit could also face the earnings limit. A widow can claim a survivor benefit as young as 60, though her benefit will be reduced by claiming before full retirement age. If she is working and exceeds the earnings limit, part of those reduced benefits will be withheld.

The earnings limit also applies to the spousal benefit claimed by a nonworking spouse if the other spouse is working and both are younger than full retirement age. Social Security withholds benefits on total household earnings that exceed the limit.

Withheld benefits are not lost forever, however. At the beneficiarys full retirement age, Social Security will adjust the monthly benefit upward to account for the withheld benefits. The beneficiary will continue to receive the higher payment even after she recoups the withheld benefits, which could take 12 years.

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Calculating How The Wep Will Affect You

I know this is a lot to follow, so if you want to take a shortcut in figuring out how the impact of the WEP, you may want to use my free calculator.

This calculator will tell you:

  • The amount of monthly Social Security benefit you can expect after the WEP reduction .
  • The number of substantial earnings years you already have
  • How additional years of substantial earnings will affect the WEP penalty

To use this calculator youll need to get a copy of your earnings history from the SSA. You should only put in your years of earnings that were covered by Social Security.

How Much Can I Earn If I Work After My Full Retirement Age

Collecting Social Security at 62 How They Feel About It Now

If you continue to work after reaching full retirement age, you may work and earn as much as you’d like. You will not be subject to the retirement earnings test, and your Social Security benefits will not be affected.

If you work prior to FRA, you may forfeit part of your benefits if you earn above annual thresholds. However, your benefit amount will be recalculated at full retirement age to account for most of those forfeited funds.

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Adjust All Of Your Annual Earnings For Inflation

Unless youre retiring this year, your future payouts will need to factor in inflation in the years between now and retirement age. The Social Security Administration uses the national average wage indexing series to calculate benefits for retirees, adjusting earnings to account for inflation in the years prior to retirement.

Your Social Security retirement earnings will be adjusted to the average wage two years prior to retirement, attached to taxes taken out with your SSN throughout your lifetime. In 2019, that average wage was $54,099.99, so someone retiring in 2021 will be indexed on that. The IRS will take $54,099.99 and multiply it by the wage ratio for each year prior to that to come up with a wage for every year worked. The Social Security Administration maintains this wage ratio, which is based on the National Average Wage Indexing Series, available here. You can perform this calculation yourself or go to the Social Security website and input the year you plan to retire at the bottom. That will give you the estimated indexing factors for each year going back to your year of birth.

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.

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The Social Security Rules Teachers Need To Know

In the 1970s and 1980s, laws were passed that amended the Social Security rules to keep individuals from double dipping, or receiving both a Social Security benefit and a pension from a job where they did not pay into the Social Security system.

The results of these amendments are two rules that could impact your ability to claim your full Social Security benefit as a teacher: The Windfall Elimination Provision and the Government Pension Offset .

These provisions reduce benefits for those who worked in a job in which they:

  • Qualified for a pension and
  • Did not pay Social Security taxes.
  • This is not limited to teachers. Other professions that often fall into this group include public sector workers like firefighters, police officers and numerous other state, county and local employees.

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