Social Security Disability Insurance
SSDI is a federal insurance program that is administered by the Social Security Administration. It was established in the year 1954 with the object of providing individuals with a source of income in the eventuality of their becoming unable to work due to a disability. The SSDI program provides monthly benefit payments when medically determinable physical and/ or mental impairment are expected to last for 12 or more months or result in death, preventing the applicant from working.
For receiving SSDI benefits, the Social Security Administration has to determine that the applicant is disabled. For this purpose, the following conditions must be satisfied-
- You are unable to engage in substantial, gainful activity due to the physical or mental impairment that is expected to result in death or has lasted or is expected to last, for at least one year.
- You are unable to handle the requirements of the job that you were able to handle before becoming disabled.
- You are unable to adjust to other types of work because of your physical or psychological condition.
- The disability is a consequence of a physical or psychological impairment that can be determined by the medically acceptable, laboratory, or clinical, diagnostic techniques.
Age : Wait And Accumulate Delayed Retirement Credits
At 70, you will get the maximum amount of benefits that you can get from Social Security. It does not make sense to delay your Social Security retirement age past 70 because your benefit amount will not increase. Waiting until 70 to begin your Social Security if you are married and are the higher earner results in a higher survivor benefit for your spouse.
The Bottom Line Advice
We dont say, Take early.’ We dont say, Take it late,” Carson stressed. “We say, Make an informed decision so that you understand the ramifications of what your choices are.”
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If You Were Born Between 1943 And 1954 Your Full Retirement Age Is 66
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.
The chart below provides examples of the percentage of your full retirement benefit amount you and your spouse would receive from age 62 up to your full retirement age.
You Can Receive Benefits Before Your Full Retirement Age
You can start receiving your Social Security retirement benefits as early as age 62, but the benefit amount will be lower than your full retirement benefit amount.
If you start receiving your benefits before your full retirement age, we will reduce your benefits based on the number of months you receive benefits before you reach your full retirement age.
If you wait until age 70 to start your benefits, your benefit amount will be higher because you will receive delayed retirement credits for each month you delay filing for benefits. There is no additional benefit increase after you reach age 70, even if you continue to delay starting benefits.
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Plan For Longer Life Expectancy
Average life expectancy, even with the recent decline, has increased dramatically since 1990 but should be viewed as a midpoint, not an endpoint, according to Sharon Carson, the executive director of retirement insights strategy at J.P. Morgan Asset Management.
Given that, you may need to plan on the probability of living much longer perhaps 35 years in retirement especially if youre a nonsmoker in excellent health, said Carson. How long might you live? Check out the Actuaries Longevity Illustrator.
Before You Make Your Decision
There are advantages and disadvantages to taking your benefit before your full retirement age. The advantage is that you collect benefits for a longer period of time. The disadvantage is your benefit will be reduced. Each person’s situation is different. It is important to remember:
- If you delay your benefits until after full retirement age, you will be eligible for delayed retirement credits that would increase your monthly benefit.
- That there are other things to consider when making the decision about when to begin receiving your retirement benefits.
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How To Use This Information
Each survivor’s situation is different. Talk to a Social Security representative before you decide to take benefits.
If you know what the worker’s yearly lifetime earnings were, you can use our Online Calculator to get a rough estimate of what the benefits would be for the surviving spouse at full retirement age.
If you know what the widow or widowers benefit is at full retirement age, you can use the information for the survivor’s year of birth to find out how much the widows or widowers benefit would be at various ages.
What To Consider Before Filing For Social Security
A larger benefit check sounds great, but there are tradeoffs, and soon-to-retire folks should consider multiple issues before they decide one way or the other on when to file. If you really want to consider all the avenues, then youll have to think about your finances and longevity two issues that people have a hard time grappling with.
But heres the key trade-off: you can file early and take a reduced benefit, expecting that a shorter life span will mean you receive more now, or you could file at full retirement age or later and claim a bigger check, and eventually live long enough to claim more than the first approach.
Social Security is like longevity insurance, says Brent Neiser, a Certified Financial Planner and former chair of the Consumer Advisory Board at the Consumer Financial Protection Bureau. Its a stream of payments that will not stop throughout your life, so delaying your benefits to keep those payments as large as possible forms a helpful base to your retirement plan.
Neiser urges those who have not saved enough for retirement to use whatever means possible to postpone their Social Security benefits until after their full retirement age to help boost their future income.
You can use personal savings to help bridge the gap, but ideally you should plan to work a little longer , Neiser says.
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Is Your Full Retirement Age Affected By Where You Live
Your FRA is not affected by where you live. Most Social Security rules, including those that determine benefit amount and claiming age, are set by federal law. However, some states do tax Social Security benefits, so where you live can affect tax levels on your retirement income. But again, the age at which you claim benefits won’t affect your tax rate — your income is the key factor.
Social Security At Age 62
The table below shows the effect of early retirement on Social Security benefits for both a retired worker and his/her spouse if they start collecting benefits at age 62.
For this illustration, a Social Security benefit amount of $1,000 at Full Retirement is used.
| Year of | |
|---|---|
| 325 | 35.00% |
As you can see from the table above, depending on the year you were born, youll receive between 20 and 30 percent less per month if you collect Social Security benefits at age 62 than if you wait until full retirement age to begin collecting benefits.
Additionally, if you are claiming benefits as a spouse, youll receive between 25 and 35 percent less per month if you collect Social Security benefits at age 62 than if you wait until full retirement age to begin collecting benefits.
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Claiming Social Security At Age 65
Those whose Full Retirement Age is 65 are already that age or older. For those born after 1955 and before 1960, Full Retirement Age is 66 and some months. By retiring at age 65, those beneficiaries lose at least 12 months worth of increases. For those born in 1960 or after, Full Retirement Age is 67, so they lose up to 24 months of increases if they retire at age 65.
Below, we show how a person born in 1960 and entitled to a full benefit of $2,500 could see his or her monthly benefit change based on claiming age:
What Is The Maximum Social Security Benefit At Age 62
What is the highest Social Security check you can collect if you start receiving benefits at age 62?
In 2022, if you start collecting social security at age 62, the maximum Social Security benefit you can receive is $2,364.
However, if you retire at full retirement age in 2022, your maximum benefit would be $3,345.
Also, If you retire at age 70 in 2022, your maximum benefit would be $4,194.
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Taking Social Security: How To Benefit By Waiting
For those who are able to do so, it may make sense to wait even longer, because youll receive a larger monthly benefit even more than your full benefit. Every month past your full retirement that you delay, Social Security will increase your check by about 0.7 percent per month.
If your full retirement age is 66, then heres how much your check would increase:
| Retirement age | New benefit | A $1,000 check becomes |
|---|---|---|
| $1,320 |
So if your full retirement age is 66, then if you can wait two more years and claim benefits at age 68, youll increase your monthly check by 16 percent. In this case, if your full benefit were $1,000 a month, your new benefit would become $1,160 per month. And youll still receive cost of living adjustments on top of this amount, typically raising your payout a little each year.
Workers have other ways to grow their Social Security benefits, too, but its important to start early.
Full Retirement Age For Getting Social Security
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.
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What Is The Average Retirement Age In The Us
The average retirement age in the US is calculated separately for men and women, and there are a lot of studies that signify different information regarding the average retirement age.
For men, the retirement age is around 65, whereas, for female workers, the average retirement age is 62.
Apart from this, certain things were found during a study conducted by government officials.
There is a lot of diversity seen in peoples retirements between people with low job profiles and people working on high job profiles. People working in a lower job profile or with a lower degree tend to take early retirement at an early age, as their work requires a lot of hard work and they are always on the field. People working in higher posts take retirement in later years some even work after their retirement age.
The FRA is an age bracket that is set by the US government, which gives insights about the retirement age and also the right age to claim the social security benefits, which are given either in the form of monthly payments to private workers or in the form of a pension to public sector workers. The FRA is 67 for people born in the year 1960 or after 1960, and for people who are born before 1960, it is 66 years and 6 months.
FAQ
Q1: What is the full retirement age for people born before the year 1960?
For people born before 1960, the FRA ranges from 66 to 67. It is 66 for people born between 1943 and 1955, and after that, 2 months are added per year.
Payment Schedule For Ssi Benefits
SSI monthly benefit payments are paid on the 1st day of each month. If the 1st is a Saturday, Sunday, or holiday, then you will receive the monthly benefits on the earliest previous working day. Heres the SSI payment schedule for 2023-
Contact an experienced SSD lawyer today
Clauson Law boasts of a capable team of disability lawyers who are out there to get you the disability benefits that you are entitled to receive. We are not just a law firm, and we want to do everything possible to help you with your disability. Contact us today to talk to an experienced disability lawyer about your claim and start fighting for the benefits you deserve.
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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 within the first 12 months of receiving benefits 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. Be aware that you’re 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, pay back the years’ worth of benefits you received, go back to work, and then wait until your full retirement age to restart your benefit checks at a higher level.
Once you reach full retirement age, another option is to voluntarily stop benefits at any point before age 70 to receive delayed retirement credits . Benefits will automatically restart at age 70 at a higher amountâunless you choose to start taking benefits before then. Note that when you withdraw your application or stop your benefits after full retirement age, you must specify if your Medicare coverageâif you have itâshould be included in the withdrawal.
Social Security Benefit Payments Schedule 2023
The Social Security Administration provides monthly benefits to retired Americans, disabled workers, and survivor spouses. If you worked during the course of your life and paid into the social security system, you will be eligible to apply to receive Social Security Disability Insurance benefits following a disabling illness or injury. Supplemental Security Income , on the other hand, is a needs-based, cash assistance program that assists those who are disabled, elderly , or blind. Unlike the SSDI, an applicant for SSI need not have paid into the Social Security system. To be eligible, the applicant must have little to no income or assets.
If you are eligible under a Social Security Disability program, you will get your disability benefits in the form of monthly lump sum payments. The payment dates for Social Security benefits are pre-determined by the Social Security Administration. Depending on the Social Security program for which you are eligible, you will get monthly benefits either on the basis of your date of birth or on a particular day of the month fixed by the Social Security Administration.
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The Penalty For Taking Social Security Early
After you figure out your AIME, you’ll want to figure out what your primary insurance amount would be. The PIA is the monthly benefit a retiree would get if they took Social Security at their FRA, which is 67 for those born after 1960 and between 66 and 67 for those born between 1943 and 1960. For those turning 62 in 2022, the PIA calculation involves three steps:
- 90% of the first $1,024 of your AIME.
- 32% of any amount between $1,024 and $6,172.
- 15% of the leftover amount above $6,172.
Now, if you’ll recall, in our example the hypothetical person is actually taking Social Security early at the age of 62, and we’re also going to assume this person was born after 1960, which means their FRA is 67.
There is a penalty for taking Social Security before your FRA. Essentially, the reduction is based on the number of months between a person’s FRA and when they start claiming Social Security.
The maximum number of months, in this case, is 60 because you can only start taking Social Security at 62 and the FRA in this example is 67 . Taking Social Security 60 months early results in a 30% haircut to your monthly benefits.
How To Calculate Your Benefits
The formula the Social Security Agency uses to calculate your benefits can look complex on its face but is easy enough to break down if you take the time to do the work.
The first part of the formula is based on your wages, specifically those of the 35 years in your career in which you made the most earnings. This is called your average indexed monthly earnings . However, you don’t just take a straight average of your salary in those 35 years because your wages in, say, 1987 were worth a lot more back then, than if we took that number now.
To account for inflation, the SSA takes your nominal earnings and indexes them to figure out what that wage in 1987 would equal in the present. For instance, the SSA shows on its website that if you made $17,500 in nominal earnings in 1987, your indexed earnings in 2022 would be $52,832.
You would then take your indexed earnings over your 35 highest years of wages, average those out, and then divide by 12 to get your AIME. If your highest 35 years of wages after indexing average out to $60,000, your AIME would be $5,000.
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