Why 62 67 And 70 Are The Best Ages To Claim Social Security
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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-
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What Is The Average Social Security Benefit At Age 80
Social Security was created at a time when the average life expectancy in America was just 51 to 65 years, depending on sex and race. At that time, living to age 80 was much less common than it is today, which is one of the many reasons that modifications to the program are a constant topic of discussion.
Regardless of age and era, Social Security was never intended to fully replace a workers income in retirement. Heres a look at the current average Social Security benefit at age 80, along with suggestions as to how to maximize the amount you earn and buffer it with supplemental income.
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How Social Security Helps Pay For Medicare
In addition to automatically enrolling you in Medicare, if you are receiving Social Security or Railroad Retirement Board benefits, your Medicare Part B premium will be automatically deducted from your monthly benefit payment.
If you are not receiving Social Security or Railroad Retirement Board benefits yet, you will get a bill called a Notice of Medicare Premium Payment Due . Bills can be paid for by check or money order, a credit or debit card, or through online bill pay services.
In conclusion, as youre starting to think about Medicare and retirement, do some research and make sure you understand how your Social Security benefits can or will play a role.
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Why Did The Full Retirement Age Change
Full retirement age, also called “normal retirement age,” was 65 for many years. In 1983, Congress passed a law to gradually raise the age because people are living longer and are generally healthier in older age.
The law raised the full retirement age beginning with people born in 1938 or later. The retirement age gradually increases by a few months for every birth year, until it reaches 67 for people born in 1960 and later.
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Full Retirement Age: Age 6567 Depending On Date Of Birth
Your full retirement age is determined by your day and year of birth, and it is the age in which you get your full amount of Social Security benefits. For every year you delay taking your benefits from full retirement age up until you turn 70, your benefit amount will increase by almost 8% a year. It is referred to as a delayed retirement credit. This increase can result in more lifetime income for you and your spouse. Even after factoring in a potential return on investment and the monthly benefits you could have received if you claimed early, there can still be a $50,000$100,000 increase in lifetime benefits by waiting until you are older.
What If Your Ex Is Deceased
If your ex has passed away, and youre at your full retirement age or older, you may be eligible for 100% of their Social Security benefit under whats called survivors benefits.
Benefits paid to you as a surviving divorced spouse wont affect the benefit amount for other survivors who are also getting benefits on the workers record.
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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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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.
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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 dont 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.
Receiving Survivors Benefits Early
The earliest a widow or widower can start receiving Social Security survivors benefits based on age will remain at age 60.
Widows or widowers benefits based on age can start any time between age 60 and full retirement age as a survivor. If the benefits start at an earlier age, they are reduced a fraction of a percent for each month before full retirement age.
If a person receives widow’s or widower’s benefits, and will qualify for a retirement benefit that’s more than their survivors benefit, they can switch to their own retirement benefit as early as age 62 or as late as age 70. The rules are complicated and vary depending on the situation. Talk to a Social Security representative about the options available.
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How Delaying Can Help
Your retirement may stretch out far longer than you think.
A 65-year-old male today, in average health, has a 54% probability of living to age 85, according to The Society of Actuaries . For a 65-year-old woman, the likelihood of reaching 85 is 65%. And one in three 65-year-old men in average health has a chance of living to 90. Nearly half of women age 65 in average health, will probably make it to 90.
That means your retirement savings need to last a long time and Social Security can help with that.
Lets say you turn 62 in 2022, your full retirement age is 67, and your monthly benefit starting at full retirement age is $1,000. If you start getting benefits at age 62, the Social Security Administration reduces your monthly benefit 30% to $700 to account for the longer time you receive benefits. This decrease is usually permanent.
If you choose to delay getting benefits until age 70, you earn delayed retirement credits, which comes to roughly an 8% per year annual increase for each year between your full retirement age until you hit 70 when the credits stop accruing. That would increase your monthly benefit to $1,240.
The benefit at age 70 in this example is about 77% more than the benefit you would receive each month if you start getting benefits at age 62 a difference of $540 each month.
For instance, Social Security benefits will increase 8.7% next year as part of the annual cost-of-living adjustment for 2023.
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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Your Retirement Age And When You Stop Working
Your retirement age is the age you begin receiving Social Security retirement benefits. For many people, this is not the same age youll stop working.
The age you stop working can affect the amount of your Social Security retirement benefits. We base your retirement benefit on your highest 35 years of earnings and the age you start receiving benefits.
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.
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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The Role Of Your Ex And Divorced Spousal Benefits
When you file for benefits, youll need to prove that you were married to your ex for at least 10 years, and that youre now divorced. But you dont have to alert your ex about your plans. Even though youre claiming Social Security based on your exs record, it doesnt impact their benefits one bit.
What’s Full Retirement Age
Full retirement age is when you’re eligible to receive full Social Security benefits. Your full retirement age depends on your birth year: For anyone born in 1960 or later, full retirement age is 67. For those born in 1955 through to the end of 1959 , full retirement age ranges between 66 and 2 months and 66 and 10 months. If you were born before 1955, you’ve already reached age 66 and full retirement age.
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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 youve already received . Then, you could restart benefits at a later date to take advantage of a higher payout. Be aware that youre limited to one withdrawal per lifetime.
For example, lets 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.
How Age Affects Benefits
You become eligible to collect your full retirement benefit 100 percent of the amount youre entitled to receive based on your lifetime earnings history at full retirement age , which is 66 and 4 months for those born in 1956 and will gradually rise to 67 for those born in 1960 and later.
The minimum age to begin benefits is 62, but Social Security reduces your monthly payment by a fraction of a percent for each month before the FRA that you claim. Someone born in 1960 who starts benefits in 2022 will get as little as 70 percent of their full monthly benefit. That reduction is permanent.
If you put off claiming benefits until after full retirement age, Social Security bumps up your prospective payment for each month of delay. That 1960 baby would get 124 percent of their full retirement benefit, for life, by waiting until their 70th birthday to start Social Security.
Why do benefits increase if you wait past 62? Because Social Security works by the principle that over the course of a retirement, you should receive the same total amount regardless of the age at which you start benefits. Monthly payment levels are calculated so that if you file for reduced benefits at 62, you will receive the same total amount as if you start at 70, or at any age in between, if you live to an average life expectancy.
Of course, the average is just that an average and most people live either shorter or longer lives. That’s where the break-even point comes in.
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Other Factors To Consider
When planning for retirement, however, theres more to consider than just dollars and cents. You could pocket the most money in the long term by waiting to start your benefits, but only if you live past the break-even point.
Thats where other factors such as your physical condition and family situation come into play. Suppose you reach claiming age in poor health. Do you expect to live long enough to make up for the payments youd forgo by delaying? On the other hand, is your spouse going to be depending on your benefits after you die? The tradeoff for starting your payments early could be lower survivor benefits for your mate.
Other income, or assets such as a pension or IRA, might affect your claiming decision. Perhaps you like your job and want to keep working well into your 60s, or you can afford to live on your savings while you delay Social Security and boost your eventual benefit. On the flip side, if youre unable to work and need the money, collecting Social Security benefits early could help you make ends meet.
A financial adviser can help you weigh the pros and cons to determine what option works best for you.
Keep in mind
How To Appeal A Social Security Claim That Has Been Denied
Almost half of all Social Security benefit applications are denied. While the vast majority of these deal with disability benefits, sometimes retirement benefits are denied as well.
Some of the reasons why a retirement benefit application might be denied include:
- You have not accumulated enough work credits in your work life
- Your application has missing or incorrect information
- You submitted your application too early. You cant apply until about four months before you turn 62.
- You are already receiving Social Security disability benefits. Retirement and disability payments serve the same purpose to provide financial security when a person is not able to work any longer.
- If you are a surviving spouse, you do not meet the minimum age requirement or you got remarried before you turned 60.
If your benefit application is denied, you must submit an appeal within 60 days after you get a written notice from SSA. To start the appeal process, complete Form SSA-561-U2 Request for Reconsideration. Explain your reasons for seeking reconsideration and submit any additional documentation that will help you make your case to Social Security officials.
The Request for Reconsideration is the first of four possible levels of appeal for Social Security retirement benefits. It is an informal review of your application and in many instances, when new information is submitted or issues are clarified, this level of appeal can lead to a reinstatement or approval of benefits.
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