Can Your Pia Change After You Reach Age 62
There are two things that affect your PIA after you reach age 62:
Can I Still Work And Collect Social Security Benefits
You can collect Social Security benefits while working, starting at age 62. However, your age and earnings may impact the amount of benefits you receive during that time. Working wont permanentaly reduce the Social Security benefits you receive, nor will your withheld benefits disappear.
Once you reach full retirement age:
- Your monthly benefit will increase, taking into account prior benefits detained due to earnings.
- Extra income no longer decreases your benefits.
If you work and collect Social Security when you are:
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Get Ssa Benefits While Living Abroad
U.S. citizens can travel to or live in most, but not all, foreign countries and still receive their Social Security benefits. You can find out if you can receive benefits overseas by using the Social Security Administrations payment verification tool. Once you access the tool, pick the country you’re visiting or living in from the drop-down menu options.
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If You Will Be Eligible For A Social Security Retirement Benefit Based On Your Own Earnings:
As well as a higher benefit based on your spouse’s earnings, it will also affect your benefits as a spouse, widow, or widower.
To get a more accurate estimate of how the government pension you receive will affect your benefit based on your spouse’s work:
Windfall Elimination Provision
Fact #: Social Security Provides A Foundation Of Retirement Protection For Nearly All People In The Us
97% of older adults either receive Social Security or will receive it.
Almost all workers participate in Social Security by making payroll tax contributions, and almost all older adults receive Social Security benefits. In fact, 97 percent of older adults either receive Social Security or will receive it, according to Social Security Administration estimates.
The near universality of Social Security brings many important advantages. It provides a foundation of retirement protection for people at all earnings levels. It encourages private pensions and personal saving because it isnt means-tested it doesnt reduce or deny benefits to people whose income or assets exceed a certain level. Social Security provides a higher annual payout than private retirement annuities per dollar contributed because its risk pool is not limited to those who expect to live a long time, no funds leak out in lump-sum payments or bequests, and its administrative costs are much lower.
Universal participation and the absence of means-testing make Social Security very efficient to administer. Administrative costs amount to only 0.6 percent of annual benefits, far below the percentages for private retirement annuities. Means-testing Social Security would impose significant reporting and processing burdens on both recipients and administrators, undercutting many of those advantages while yielding little savings.
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What If I Delay Taking My Benefits
If you retire sometime between your full retirement age and age 70, you typically earn a “delayed retirement” credit for your own benefits . For example, say you were born in 1960, and your full retirement age is 67. If you start your benefits at age 69, you would receive a credit of 8% per year multiplied by two . This means your benefit would be 16% higher than the amount you would have received at age 67.
Benefit Reduction If Taken Before Full Retirement Age
When calculating benefits for early retirement, there are one or two calculations, depending on how early benefits are taken. Assuming a normal retirement age of 67, the age of 62 is the earliest year a person can receive benefits or 60 months early.
The benefit is reduced by 5/9 of 1% for each month before the normal retirement age , up to 36 months. If the number of months exceeds 36, then the benefit is further reduced 5/12 of 1% per month.
For example, let’s say that a person wants to retire at 62, leading to a 60-month reduction from the normal retirement age of 67. The first 36 months would be calculated as 36 months times 5/9 of 1% plus 24 months times 5/12 of 1%.
- First 36 months: 5/9 = .5555 * 1% = .005555 * 36 months = .19999 or 20%*
- Remaining 24 months: 5/12 = .416666 * 1% = .00416666 * 24 months = .0999 or 10%
- In other words, benefits would be reduced by 30% if taken at age 62.
*The results were rounded and multiplied by 100 to create a percentage.
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How Much Social Security Will I Get In Retirement
Quick Answer
In this article:
The amount of your monthly Social Security retirement benefit depends on multiple factors, including how much you earn over your working life, how old you are when you retire and allowances for inflation. Understanding how the payment is calculated can help you estimate what to expect and better position yourself to plan for retirement. Here’s how it works.
Scenario : Full Retirement Now = $2447/month At 67
If I stop working now and have no more earned income, my benefits would be $2,447 when Im 67. This is the green dot on the chart below. Im getting very close to the second bend point.
This PIA is relatively low here because I have 8 years with no earnings. Remember, I only have 24 earning years up until today. The AIME calculation sums up your highest 35 earning years and averages them out. The 11 zero earning years drag down the average.
- Mrs. RB40s will receive $1,774/month at 67 in this scenario . She is about halfway to the second bend point.
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How Does The Social Security Administration Calculate Benefits
Benefits also depend on how much money youâve earned in life. The Social Security Administration takes your highest-earning 35 years of covered wages and averages them, indexing for inflation. They give you a big fat âzeroâ for each year you donât have earnings, so people who worked for fewer than 35 years may see lower benefits.
The Social Security Administration also makes annual Cost of Living Adjustments, even as you collect benefits. That means the retirement income you collect from Social Security has built-in protection against inflation. For many people, Social Security is the only form of retirement income they have that is directly linked to inflation. Itâs a big perk that doesnât get a lot of attention.
A Hard Number To Snag
To qualify for the maximum Social Security benefit, you need to do three things:
- Work at least 35 years
- Earn an income for at least 35 years that’s equal to or beyond the wage cap each year
- Delay your Social Security filing until age 70
See, Social Security benefits are calculated based on your 35 highest-paid years in the labor force. And each year, there’s a wage cap put into place that determines how much income gets taxed for Social Security purposes.
This year, the wage cap is $147,000. Next year, it’s rising to $160,200. So to get the highest possible monthly benefit out of Social Security, you need to earn enough money for 35 years to meet or exceed the wage cap.
Finally, if you want the highest Social Security benefit, you’ll need to delay your claim until age 70. That will boost your benefit and potentially bring it up to $4,555.
It may be possible for you to work for 35 years, and it may also be pretty easy for you to exercise patience and delay your Social Security filing until your 70th birthday. But snagging a high enough wage to claim the maximum monthly benefit is a different story. So for that reason alone, a $4,555 monthly payday may not be in the cards for you.
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What Income Reduces Social Security Benefits
If you start taking Social Security benefits before you reach full retirement age, any income you earn over the annual limit until you reach full retirement age will lower your benefit eligibility for that year. In 2022, if you are retired and haven’t reached full retirement age, the SSA will deduct $1 from your benefits for every $2 earned over $19,560. In the year you reach full retirement age, the SSA will deduct $1 for every $3 earned over $51,960. For the 2023 tax year, these thresholds are slightly higher, at $21,240 and $56,520, respectively.
Back To Work As An Engineer For 20 More Years: $3024/month
This one makes a bigger difference. If I bite the bullet and go back to work as an engineer , my Social Security Benefits would increase considerably. However, I dont want to do that. Life has been too good since I retired. Personally, I think engineers should plan for early retirement or a career change. Its too stressful to work in the profession for your whole career. At this point, its not worth it to me to go back to work full-time.
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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-six 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.
Adjust Your Pia For The Age You Will Begin Benefits
The final amount of Social Security retirement benefit that you receive is based on the age when you begin benefits.
The earliest you can begin retirement benefits is age 62 . You will get more by waiting until a later ageas late as age 70to begin receiving benefits.
Of course, another complex formula is used to determine how much more you will receive if you wait.
This formula uses your Primary Insurance Amount calculated in the previous step. This is the amount you will get if you start benefits at your full retirement age . Your FRA can vary, depending on the year you were born. For people born between 1943 and 1954, as in our example, the FRA is age 66.
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How Social Security Benefits Work
As mentioned above, your Social Security benefits are funded through payroll taxes. You typically pay about 6.2% of your paycheck into Social Security up to a taxable maximum income of $147,000 for 2022. If youre self-employed, youll pay the entire 12.4% up to the maximum.
Although youll pay toward Social Security with every paycheck, your money isnt held for you. Instead, your taxes go into a pool to pay for people currently collecting benefits.
More than $1 trillion was collected from payroll taxes for Social Security in 2020. The Social Security retirement benefit you will receive will primarily be paid for by people working when you start collecting.
Social Security Recipients: Increased Benefit Amounts Are Coming Your Way In 2023
Social Security recipients can expect to see a 8.7% cost-of-living adjustment increase in their benefit amount in 2023.
Social Security beneficiaries can expect to see a big increase in their benefit amount thanks to the cost-of-living adjustment increase in the new year. If you created an online My Social Security account by Nov. 15, you can now see how much extra you’ll be getting — we’ll explain below how to find the document with your COLA increase. If you don’t have an account or you didn’t create one by the November deadline, don’t worry. You’ll receive a letter in the mail with this information.
A My Social Security account will show you your current or expected future benefits, based on your expected retirement age and your work history. You can also get documents for filing your taxes, request a benefit verification letter or change your mailing address and other personal information.
Here’s how to access your Social Security benefits online, and what sort of information and features you’ll be able to access with your My Social Security account. If you receive benefits now, here’s the Social Security payment schedule for December. Also, Supplemental Security Income recipients will get their first increased check in December.
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Myth #: You Must Claim Your Social Security Benefit At Age 62
Some people think you have to start claiming your Social Security benefits at age 62. That’s a myth: 62 is the earliest age you can claim your benefit, but it’s not the only age to do so.
Your base benefit is calculated according to your “full retirement age,” or FRA, and your FRA is determined by your date of birth. The Social Security Administration calculates your base Social Security benefit based on your average indexed monthly earnings during the 35 years in which you earned the most .
Tip: You’ll find your FRA at Social Security’s website, SSA.gov, or on a paper statement mailed to you by the SSA. If you were born in 1960 or later, your FRA is 67.
If you claim Social Security benefits any time before your FRA, you lock in a permanent reduction in monthly income. Claiming at 62 translates to a reduced monthly income of 30%, relative to your FRA monthly benefit . That means you may receive a lot less monthly retirement income, every year, for potentially several decades. A key consideration for when you claim Social Security benefits is maximizing your income for a retirement that could last longer than 30 years.
Wait until age 70 and lock in a “bonus”:
- Waiting to claim Social Security after age 62 comes with a bonus: roughly 8% additional monthly income per year for each year you delay claiming .
- If your FRA is 67, your monthly income would increase 24% by waiting from 67 to 70.
- If your FRA is 67, your monthly income would increase around 77% by waiting from 62 to 70.
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How Does The Government Determine Eligibility For Social Security Disability Benefits
To qualify for SSDI or SSI, you must meet certain criteria. First, you must have a health condition that falls under the Social Security Administrationâs strict definition of disability. Eligible disabilities may include:
- Bone marrow failure
- Neurodevelopmental disorders
The Social Security Administration only approves severe disabilities that prevent you from performing basic work-related tasks for at least one year. For an exhaustive list of eligible diseases, visit the Social Security Administration website.
Other factors that the Social Security Administration uses to determine eligibility include:
- Widowhood. You may be eligible for disability benefits if 1) you have a qualifying disability, 2) youâre between the age of 50 and 60, and 3) your current or divorced spouse dies.
- Vision. If you have a visual impairment that prevents you from working, you may be eligible for Social Security disability benefits.
- Work Credits. Typically, you must earn 40 work credits to qualify for SSDI, and you need to earn 20 of these credits in the last 10 years. You can earn one work credit for every $1,510 in income, and you can earn a maximum of four work credits per year.
To view the most up-to-date Social Security disability requirements, visit the Social Security Administration website.
What Happens To Ssdi When You Also Receive Workers Comp Benefits
Workers compensation and other public benefits that you receive must be reported to the Social Security Administration when you apply for or receive SSDI benefits. The reason is that the combined total of the workers comp and state disability benefits along with your monthly SSDI cannot exceed 80% the average current earnings you had when you became disabled and were no longer able to work.
What this means in terms of your monthly SSDI payment is best demonstrated by an example provided by Social Security of a worker with average monthly earnings of $4,000 who becomes disabled and can no longer work. The disabled worker, the workers spouse and their two children qualify for SSDI benefits of $2,200 each month.
However, the worker also receives $2,000 a month through workers compensation, which makes the total state and federal benefits $4,200 or $1,000 more than 80% of the persons average current earnings when employed. The family continues to receive their workers compensation monthly payment, but the SSDI benefit is reduced by $1,000 until the compensation benefits end or the worker reaches full retirement age when SSDI converts to retirement benefits.
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