When Can I Get Social Security
The earliest you can start receiving Social Security benefits is age 62. But the earlier you elect to receive your benefits, the smaller your monthly checks will be . To receive full benefits, you will have to avoid collecting Social Security until you reach your full retirement age. For people born in 1960 or later, that age is 67. And with the delay retirement credits, you can get your largest benefit at age 70.
If you decide to retire early, you have the option of delaying your Social Security benefits. This strategy may work particularly well for married couples.
Change Is Always Possible
It’s not hard to understand why the solvency of Social Security has been the center of a growing national debate over the past few years. It’s simple economics.
More people are retiring than entering the workforce, which will eventually reduce the ratio of workers to retirees to 2-to-1 . In addition, people are living much longer in retirement, sometimes decades longer.
Under the pressure of possible insolvency, Congress has debated several Social Security reform measures in recent years. While no new legislation has been passed, the possibility continues to exist for dramatic revisions to this social insurance system to come about in the future, changing how Social Security factors into your retirement planning.
To learn more about your benefits, visit the Social Security website at www.ssa.gov.
What Is The Average Social Security Benefit At Age 62
According to the Social Security Administration , if you were born between 1943 and 1954, your full retirement age is 66. By claiming at the age of 62, a hypothetical $1000 retirement benefit would be reduced by 25% and you would only receive $750 per month. A $500 monthly spousal benefit would be reduced to $350.
The greater the gap between age 62 and FRA, the higher the percentage of reduction in retirement benefits. For those born in 1960 or later, retirement benefits are reduced by 30% and spousal benefits are reduced by 35%. This means a $1000 retirement benefit would be reduced to $700 per month.
According to the SSAs 2021 Annual Statistical Supplement, the monthly benefit amount for retired workers claiming benefits at age 62 earning the average wage was $1,480 per month for the worker alone. The benefit amount for workers with spouses claiming benefits was $2,170 at age 62.
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Although claiming before FRA allows you to collect retirement benefits for a longer period of time, your benefit amount will be significantly reduced. The SSA says that if you delay your benefits until after FRA, you will be eligible for delayed retirement credits that would increase your monthly benefit.
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Which Is The Best Strategy For You
Whether you should claim Social Security at 62 or wait a few years depends largely on your personal situation. If your savings are falling short and you know you’ll need to depend heavily on Social Security in retirement, you may be better off waiting a few years to file. Especially as inflation surges and retirement becomes more expensive, those larger checks may go a long way.
On the other hand, if you’ve built a robust retirement fund or if you have no choice but to retire early, claiming Social Security as early as possible could be a smart move. While you will receive smaller checks, sometimes that’s a worthwhile trade-off.
There’s not necessarily a right or wrong answer as to when you should claim Social Security. Despite rising inflation and market volatility, claiming early isn’t always a bad move. Just be sure you’ve weighed the pros and cons carefully as you decide whether it’s the right option for you.
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How Much You’ll Have To Earn To Reach The Maximum Benefit Amount
Your income is another crucial factor in reaching the highest benefit amount. The more you’re earning, the more you’ll be eligible to collect in benefits — up to a certain point.
Once you surpass the maximum taxable earnings limit , a higher income won’t result in additional benefits. To earn this maximum benefit amount, then, you’ll need to reach the maximum taxable earnings limit.
This limit changes from year to year to account for inflation. This year, the limit is $142,800 per year, but in 2022, it will increase to $147,000 per year. If your goal is to collect the maximum $2,364 per month at age 62, you’ll need to be reaching these limits consistently throughout your career.
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Early Benefits Can Still Pay Off
However, taking early benefits can still pay off despite the reduced monthly check. But youll want to be sure you budget for a reduced benefit.
No one can predict how long youll live, but if youre facing a potentially significant reduction in life expectancy and are short of income, taking Social Security early may be appropriate, Neiser says.
Married women are also good candidates for claiming early benefits because they are likely to outlive their husbands. Those widows then become eligible to receive the greater of either their benefit or their late husbands benefit.
However, this scenario works only if the husband does not claim his benefits early. By not claiming early benefits, the husband effectively increases the monthly benefit his wife eventually receives. So, youll want to calculate how filing early will affect your spousal benefit here.
Effect Of Delaying Retirement Benefits
1Represents Full Retirement Age based on DOB January 2, 1960
2PIA = The primary insurance amount is the basis for benefits that are paid to an individual
That higher baseline would last for the rest of your retirement and serve as the basis for future increases linked to inflation. While it’s important to consider your personal circumstancesâit’s not always possible to wait, particularly if you are in poor health or can’t afford to delayâthe benefits of waiting can be significant.
Be aware that if you decide to wait past age 65, you may still need to sign up for Medicare. In some circumstances your Medicare coverage may be delayed and cost more if you don’t sign up at age 65. If you start Social Security benefits early, you’ll automatically be enrolled into Medicare Parts A and B when you turn age 65.
Your annual Social Security statement will list your projected benefits between age 62 to 70, assuming you continue to work and earn about the same amount through those ages. If you need a copy of your annual statement, you can request one or view it online on the Social Security Administration portal.
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Working While Receiving Benefits
You may work after you start receiving benefits, which could mean a higher benefit for you in the future. We may withhold some of your benefits if you earn more than the yearly earnings limit. Sometimes people who retire in mid-year already have earned more than the annual earnings limit. However:
- We have a special rule that applies to earnings for one year, usually the first year you begin receiving benefits. This means we cannot withhold benefits for any month we consider you retired, regardless of your yearly earnings.
- After you reach full retirement age, we will recalculate your benefit amount to take into account any months you did not receive benefits because your earnings were too high.
Early Social Security Retirement Benefits And Longevity
One consideration is how long youll live . The Society of Actuaries data suggests that a 65-year old male today in average health has a 35% chance of living to age 90 for a woman, the odds are 46% . If you anticipate a longer retirement, delaying retirement benefits could enhance your lifetime payments, as your monthly amount will be higher. Conversely, if you expect a shorter lifespan , electing early benefits could be more advantageous.
People typically reach their break-even age about 12 years after Full Retirement Age. Thats the point at which your total lifetime benefits will be greater by claiming early than they would be if you wait to claim benefits.
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When You File For Benefits Will Have Major Implications For Your Finances In Retirement But There’s No One
Determining when to begin claiming Social Security is a big decision, as it will affect your monthly income for the rest of your retirement.
The earliest you can file for benefits is age 62, but doing so will result in a reduction of 30% in your monthly benefits. This reduction is permanent, too, so it’s not a decision to be taken lightly.
With everything going on right now — from surging inflation to falling stock prices to concerns about a recession — is it still a good idea to file for Social Security at 62? Or should you hold off a few years and collect larger checks?
Image source: Getty Images.
Can I Draw Social Security At 62 And Still Work Full Time
All financial plans are important, but Social Security benefits play a profound role in preventing elderly poverty and are paid out at an important stage in a workers life. With that in mind, it pays to know when you can start receiving your monthly payments and how continuing to work while collecting Social Security will impact your benefits.
As the Social Security Administration points out, it is perfectly fine to work full time and collect Social Security when you turn the eligible-to-collect age of 62. Whether you should, in normal circumstances, is another issue entirely.
With a few exceptions, almost every financial guru will tell you to wait as long as you can to start collecting your Social Security payments. If you choose to draw on your Social Security before you reach your full retirement age and if you earn more than the designated SSA income limits, your benefits will be reduced.
The SSA deducts $1 for every $2 you earn over the $19,560 limit so that you would get $2,180 of your Social Security benefits kept back.
Using the SSAs example in its How Work Affects Your Benefits publication, if your monthly Social Security payment at 62 years is $600 and you intend to make $23,920 for the year, you will get payments withheld for the $4,360 you earn over the $19,560 limit.
You can keep track of your benefits by using the SSAs online platform, mySocialSecurity.
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How To Determine If Social Security Benefits Are Taxable
Seniors whose only source of income is Social Security do not have to pay federal income taxes on their benefits. If they receive other sources of income, including tax-exempt interest income, they must add one-half of their annual Social Security benefits to their other income and then compare the result to a threshold set by the IRS. If the total is more than the IRS threshold, some of their Social Security benefits are taxable.
For 2020, the threshold amount is $25,000 for singles and $32,000 for married couples filing jointly. Married couples who live together but file separately have a threshold of $0 and must pay taxes on Social Security benefits regardless of other income earned.
The formula for calculating your combined income includes adding your adjusted gross income plus nontaxable interest plus half of your Social Security benefits. Your other income, which is included in adjusted gross income, can come from a part-time job or 401 withdrawals.
More specifically, Social Security benefits are taxed as follows:
- Up to 50% of Social Security benefits are taxed on income from $25,000 to $34,000 for individuals or $32,000 to $44,000 for married couples filing jointly.
- Up to 85% of benefits are taxable if the income level is over $34,000 for individuals or $44,000 for couples.
You Badly Want To Retire
Life is not all about maximizing financial return. There are, without question, numerous instances in which working is just no longer appealing — especially after 30 or 40 years.
If this applies to you, consider taking benefits earlier than you would otherwise. If you can make it work with the rest of your financial picture, retiring at 62 might be your best option, all things considered.
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How Retirement Benefits Are Calculated
How much youll receive in retirement benefits depends on how long you worked and how much you earned.
The Social Security Administration uses your 35 highest earning years to calculate your retirement benefits. Years with low or no income reduce your benefit amount. This means that if, for example, you left the workforce to care for children or other family members, you may want to continue working as long as possible. This will boost your retirement benefits by replacing a low or zero earnings year with a higher one.
When It Makes Sense To Wait
While it’s not always ideal, sometimes waiting a few years to retire and claim Social Security can be the best decision. This is especially true if your savings and investments are falling short.
The longer you wait to begin claiming benefits , the more you’ll receive each month. In some cases, this can amount to several hundred dollars more per month, which can go a long way in retirement.
For example, say that your full retirement age is 67 years old, and the full retirement benefit you would be due at that age would be $1,600 per month. If you were to file at 62, your benefits would be reduced by 30%, leaving you with $1,120 per month.
However, if you were to delay filing for benefits until 70, you’d receive 124% of your full benefit amount, giving you a total of $1,984 per month. That’s a whopping $864 more per month than you’d collect at age 62.
While nobody can know what will happen next with the stock market or the economy, if stock prices continue to fall and we face a recession, your retirement fund could lose value in the short term. If your savings are already falling short, waiting a few years to earn those bigger checks could make it easier to weather periods of volatility in the future.
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Taxable Social Security Benefits
Say your Social Security benefits are taxable based on your combined income. The amount of tax you pay depends on your level of income. Specifically, the difference between your combined income and the IRS base amount .
Youll never pay taxes on more than 85% of your Social Security benefits.
Iowa used to assess taxes on benefits, but it phased the taxes out completely in 2014, while New Mexico exempts some benefits for beneficiaries age 65 and over. These states tax Social Security benefits with varying methods, which can include using adjusted gross income or other figures.
Social Security Administration. “Retirement Benefits,” Page 2.
Although You’ll Receive Reduced Checks By Claiming Early You Can Still Receive Thousands Of Dollars Per Month
The age at which you file for Social Security benefits will have a major impact on the amount you receive each month. While you can receive larger monthly payments by delaying benefits, many workers choose to file as early as possible at age 62. That can be a smart strategy in many cases, and there are several advantages to claiming early.
You can still earn a substantial amount in benefits by claiming early, too. In 2022, the maximum you can collect by filing at age 62 is $2,364 per month — which is significantly higher than the $1,557 per month average benefit amount. Here’s what it takes to achieve the maximum monthly payments.
Image source: Getty Images.
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You’re In Poor Health
The break-even age for claiming benefits early is generally in the late 70s or early 80s in other words, unless you live beyond these ages, you’ll almost certainly receive less money by filing for Social Security early.
With that said, if you have a shorter-than-normal life expectancy, claiming benefits as soon as possible does make sense. Locking in a guaranteed income floor at 62 can make sense in this context, particularly if ill health is preventing you from earning an active income.
Calculate How Much You Can Get From Social Security Years Before You Retire And Qualify
In the United States, those age 62 and older generally qualify to receive Social Security benefits, but depending on when you choose to start receiving those benefits will impact how much you get so its never too early to start planning ahead and start saving to supplement these future benefits, even if its seemingly far off.
Social Security currently replaces about 40% of an average workers pre-retirement earnings, according to the Social Security Administration, with most financial advisors saying that one will need 70 percent or more of pre-retirement earnings to live comfortably, it added.
The SSA added that Social Security was not designed to be the sole source of retirement income, but to supplement retirement savings in addition to other sources such as pensions.
The portion of your pre-retirement wages replaced by Social Security is based upon your highest 35 years of earnings varying depending on how much you earn over that period, the SSA added.
Eligibility for Social Security also is based on the number of credits you earn over the years you work and pay in Social Security taxes with most alive today needing 40 credits to qualify for retirement, according to the SSA.
The SSA recommended visiting its retirement benefits webpage to learn more information on how the Social Security Credits work.
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