Why It Makes Sense For The Higher Earner To Wait Longer To Collect
David and Linda are married. David’s primary insurance amount at full retirement age is $1,600 Linda’s is $1,450. They both have an FRA of 67.
If they both wait until 68 to collect, which means their benefits will increase by 8%, David’s benefits will be $1,728 , and Linda’s will be $1,566 .
That extra $12 per month means an extra $144 per year, or $2,880 over 20 years.
In addition, the spouse who lives longer will continue to collect the higher payments.
Voluntarily Suspending Your Ssdi Benefits While Working
Have you started working and earning income? Congratulations!
If you’re working and receiving Social Security Disability Insurance , you may be concerned about being overpaid by Social Security. One way to avoid the possibility of an overpayment is to consider voluntarily suspending your SSDI payment.
An overpayment occurs when you receive more money from Social Security than what you were owed for that month. The overpayment amount is equal to the difference between the cash payment you received and the amount you were due. If you have been overpaid by Social Security, you are responsible for paying it back.
Investigate Divorced Spouse Benefits
If youre currently unmarried but a previous marriage lasted at least 10 years, you could qualify for spousal benefits based on your exs work record. The amount can be up to 50% of the workers benefit at his or her full retirement age. If you remarry, however, the divorced spouse benefit stops. You must be at least 62 to get spousal benefits.
If your ex has died and the marriage lasted at least 10 years, you could qualify for survivor benefits of up to 100% of your exs benefit. You can remarry at 60 or older and still receive divorced survivor benefits. Survivor and divorced survivor benefits can begin at age 60, or at age 50 if the survivor is disabled, or at any age if youre caring for your exs child who is under 16 or disabled . People receiving survivor benefits can switch to their own benefit later if thats larger, and vice versa.
Pro tip: Your ex must be at least 62 for you to receive a divorced spousal benefit, but does not need to be receiving his or her own benefit. Survivor benefits are based on what your ex was receiving or would have received at full retirement age. If you start benefits before your own full retirement age, however, the amount you get will be reduced.
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Social Security Recipients Expected To Receive Largest Benefit Hike In 4 Decades
Social Security recipients are expected to receive the largest cost-of-living adjustment in 40 years.
The adjustment, which will be announced on Thursday, is expected to be around 9%.
Coupled with a decline in the Medicare Part B premium, the Social Security boost will put more money in the hands of the 70 million Americans who receive benefits, including the growing number of grandparents caring for their grandchildren.
Seventy-year-old Cassandra Gentry is looking forward to a hefty cost-of-living increase in her Social Security benefits not for herself but to pay for haircuts for her two grandchildren and put food on the table.
The three live in a Washington apartment building that houses 50 grandfamilies where grandparents take care of children who do not have parents present.
Gentry, who took in her grandkids to keep them in a safe environment, says the boost in benefits will help her make ends meet.
I never thought about contributing to Social Security when I was working, but now thats what I depend on,” the communications retiree said. I depend on my Social Security to care for these kids.”
Its not just older people who will see an increase in their benefits. About 4 million children receive benefits, and an untold number of others also will be helped because theyre being cared for by Social Security beneficiaries, sometimes their grandparents.
Stay Tuned For A Number Of Key Changes
Not only should the Social Security Administration soon be announcing next year’s COLA, but it should also have an update on other important figures, like the earnings-test limit. That limit represents the total amount of money seniors who work and collect Social Security simultaneously can earn before risking having benefits withheld .
Plus, the program will be announcing updates to its maximum monthly benefit, as well as changes that are apt to impact workers, like the amount of income that will be subject to Social Security taxes in 2023.
Chances are, next year’s COLA will get the most press. But it’s important to not gloss over those other details, as they’re pretty significant in their own right.
The $18,984 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 $18,984 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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When Social Security Dependents Benefits May Stop
If you’re receiving dependents benefits based on someone else’s earnings record, additional changes can cause your benefits to stop, such as getting married , turning a certain age, or changing your living arrangements. For example, if your parent receives SSDI and you’re receiving benefits based on their record, your benefits will generally end if you turn 18 or get married.
Note that if you collect SSDI benefits based on your own work history and earnings record, getting married will not affect your benefits .
The Start Stop Strategy’ Can Be Beneficial But It’s Complicated
The Social Security benefits claiming strategy known as “start, stop, start” was scaled down for individuals, and eliminated for married couples, following the Bipartisan Budget Act of 2015. Here’s a look at how it may still maximize benefits for some individuals and the way it used to work.
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Should You Suspend Your Social Security Benefits
If you’re currently collecting Social Security retirement benefits and you have reached your full Social Security retirement age, but are younger than 70, you can choose to suspend your benefits.
Image source: Getty Images.
There are a few situations where it might make sense to suspend your Social Security benefits. As an obvious example, if you simply don’t need the money yet, it can make sense to let your future benefits grow. Or, since Social Security is based on your 35 highest-earning years, suspending your benefits during your highest-earning years could result in a higher calculated benefit amount, on top of the higher monthly benefits you’ll get for delayed retirement.
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Find Out When It’s Worth Considering Despite The Loss Of A Key Strategy
Choosing when to start taking Social Security is a key financial decision. The choice you make can have an impact not just on your own financial situation but also on what your loved ones receive from Social Security, both during your lifetime and after you’ve passed away.
It used to be that suspending your Social Security benefits allowed you to take advantage of a valuable strategy that could boost the total payments you and your family could receive. Law changes have made that strategy largely unavailable, but there are still a couple of situations in which suspending your benefits can make sense. We’ll look at those after giving a brief description of what you used to be able to do by suspending your benefits.
Image source: Getty Images.
Your Social Security Benefits Could Be Reducedtemporarily
Your age matters here, as we’ll see below, but any reductions that do occur are temporary. The IRS will eventually recalculate your benefit and give you credit for months when you didn’t receive a benefit, thereby boosting your future benefit. So, don’t let a temporary reduction in payments keep you from returning to work. Here’s how the age rules work:
If you haven’t yet reached your full retirement age between 66 and 67 for people born in 1943 or laterworking could mean temporarily giving up $1 in benefits for every $2 you earn above the annual limit .
Here’s an example of how that might look:
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Medical Improvement Can Stop Both Ssdi And Ssi
The rules surrounding cessation of benefits for medical improvement are the same for Social Security disability and SSI.
If your disabling medical or mental/psychiatric condition improve, the SSA can find that you’re no longer disabled and stop your benefit payments. The SSA periodically reviews the case of all beneficiaries to determine whether they are still disabled.
The standards used in “continuing disability reviews” for determining whether someone has improved enough to return to work are tough for the SSA to meet, and most disability beneficiaries continue to receive benefits after their review. For more information, see our article on Continuing Disability Reviews.
Returning To Work While On Ssdi
If you return to work while receiving SSDI benefits, the SSA will want to determine if you are “engaging in substantial gainful activity” . Basically, that means working more than a little bit. The biggest factor in determining if work activity qualifies as SGA is the amount a person is paid.
In 2022, someone is generally considered to be engaging in SGA if they earn more than $1,350 a month For example, if you’re making, say, $200 per week doing part-time work, you wouldn’t be working over the SGA limit. But this isn’t a cut and dry issue. If you’re working a lot, it’s possible for Social Security to determine that your job activity counts as SGA even if you’re earning less than the SGA amount.
One exception to the SGA rule is what’s referred to as a “trial work period” . This period of time allows someone who is currently receiving SSDI benefits to attempt to return to work without automatically losing their SSDI eligibility. In most cases, you can work for up to nine months during your trial work period without causing your SSDI benefits to stop, regardless of how much money you’re making. If, at the end of the TWP, you’re still working and making over the SGA level, Social Security will no longer consider you disabled, and your Social Security payments will stop. For more information, see our article on the trial work period and the three-year time period that follows, the “extended period of eligibility.”
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Did You Know You Can Start Stop And Then Restart Social Security
Check out Social Security claiming strategies that could help those in or near retirement during this time of recession, stock market volatility and rising unemployment.
As the U.S. entered this recession, the unemployment rate hit a record high. Workers have been laid off or furloughed as businesses closed due to the coronavirus. With payrolls down, the benefits that Social Security offers could be more important than ever to a growing number of people near retirement whose incomes are being impacted.
Its impossible to know exactly how this recession will impact our economy long term, but we do know it might be impacting how retirees strategize their benefits. Depending on your unique situation, you might find yourself turning to one of these claiming strategies:
How To Suspend Your Social Security Benefits
If you’re collecting Social Security retirement benefits, and decide that you don’t really need the money, you may have the option of suspending your benefits. Here’s how to determine if you’re eligible to suspend your Social Security retirement benefits, the advantages of doing so, and how to start the process with the Social Security Administration.
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Suspending Your Retirement Benefit Payments
If you have reached full retirement age, but are not yet age 70, you can ask us to suspend your retirement benefit payments. By doing this, you will earn delayed retirement credits for each month your benefits are suspended which will result in a higher benefit payment to you.
Before you make a request to suspend your benefits, keep in mind that:
What If You Are Divorced
If you are divorced from a worker who is entitled to a Social Security retirement benefit, and your marriage lasted at least 10 years, you may have the opportunity to claim benefits on your ex-spouse’s recordeven if he or she remarried.
- If you are divorced, you can receive spousal benefits on your ex-spouse’s record if you are unmarried, at least 62 years old, and the benefit you’re entitled to on your ex-spouse’s record is more than what you could get through your own record.
- If your ex-spouse dies, you may be entitled to a survivor’s benefit on his or her record. You can claim as early as age 60 for reduced benefits, or receive full benefits at your full retirement age. And if you remarry after age 60, there’s no impact on your eligibility.
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Suspending Your Social Security Benefits
If you are not eligible to withdraw your benefits because it has been longer than 12 months since you enrolled, but you are between full retirement age and age 70, you can voluntarily suspend your benefits.
Let’s say you enroll in Social Security at age 64, find a new job at age 66 and decide to delay retirement. If 66 is your full retirement age, you can suspend your benefits until age 70, and your future payments will continue to grow. Thanks to delayed retirement credits, your benefit will grow by 8% each year its suspended. Remember, it doesnt make sense to delay taking Social Security past age 70 because your benefit stops growing.
To suspend your benefits, you must make a request to the Social Security Administration by phone, in person or in writing . If you want to turn your benefits back on before age 70, you also need to contact the Social Security Administration orally or in writing. Otherwise, your benefits will be automatically reinstated in the month you turn 70.
Maximizing Social Security Benefits
Most retirees consider their monthly Social Security check a big part of retirement planning. In theory, Social Security seems really simple. You reach age 62, and you can start collecting benefits. Or you wait until normal retirement age to collect a larger benefit. For an even bigger monthly check, wait until age 70. But there are some intricacies of when and how you collect Social Security that can have a huge impact on your lifetime Social Security earnings.
If you start taking your retirement benefits before your full retirement age, your benefits will be at a reduced level. If you continue with your benefits uninterrupted, they will only be increased for inflation.
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Social Security Prototype Bill
AMACs founder, Dan Weber, has been in the forefront of the fight to address the problems facing Americas Social Security program. Put simply, the program is paying out more than its taking in, causing a gradual depletion of the Social Security Trust Fund. If left unchecked, projections are that this depletion will cause the Trust Fund balance to be exhausted by 2034, with the result being a scale-down of paymentsas much as 25%to Social Security recipients. As an action-oriented association, AMAC is resolved to do its part to call for action on this very serious problem.Most recently, AMAC has developed a bipartisan compromise bill, titled Social Security Guarantee Act,” taking selected portions of bills introduced by Rep. Sam Johnson and Rep. John Larson and merging them with the Associations original legislative framework to create the new Act.AMAC representatives have been resolute in their mission to get the attention of lawmakers in Washington, meeting with many, many congressional offices and their legislative staffs over the past several years. The Association is gaining ground every day, and you can help–support AMAC in this fight by contacting your congressional representative to add your voice! Visit the Associations website at www.AMAC.us to learn more about AMACs proposed solution and to obtain a copy of a document outlining the steps that AMAC advocates to resolve this very serious problem.