You Need To Pay Down Debt
There are some debts you need to tackle before you retire. If you have high-interest debt, claiming Social Security early can help you pay the debt down. Depending on the interest rate you’re paying, the 8% yearly boost to your benefits that you receive for each year you wait past full retirement age might not be worth the increased monthly benefit. Using the early benefits to reduce or eliminate your debt earlier could mean you’ll be able to keep more of your benefits in the future.
How Do You Apply
You can apply online by using our Social Security Retirement/Medicare Benefit Application to apply for retirement, spouse’s, divorced spouse’s or Medicare benefits.
If you and your spouse apply online for retirement benefits at the same time, or if your spouse applies online after you start receiving benefits, we will check their eligibility for benefits as a spouse. If they are qualified, the online application will automatically include a request for spousal benefits on your record.
If your spouse applies for benefits, they need to be ready to supply the information we need to approve their application for these benefits:
Full Retirement Age For Survivors Born Between 1945 And 1: 66
The earliest a widow or widower can start receiving Social Security survivors benefits based on age is age 60.
If you start receiving survivors benefits at age
- 60, you will get 71.5 percent of the monthly benefit because you will be getting benefits for an additional 72 months.
- 62, you will get 81.0 percent of the monthly benefit because you will be getting benefits for an additional 48 months.
- 65, you will get 95.3 percent of the monthly benefit because you will be getting benefits for an additional 12 months.
If you’re receiving widows, widowers, or divorced widows or widowers benefits, you can switch to your own retirement benefit as early as age 62.
Reminder: Your full retirement age for retirement benefits may not match your full retirement age for survivors benefits.
How Your Social Security Survivors Benefit is Reduced
|If you start getting benefits at age1.||The survivors benefit you will receive is reduced to2.|
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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.
Your Social Security Money Is Based On Your Income
The amount of money you make during your career plays an important role in determining how much money you’ll receive from Social Security. If you work a total of 45 years, only the highest 35 years of earnings would count toward your benefit amount. For example: If you earned $35,000 for the first 10 years of your employment history and $55,000 for 35 years, only the $55,000 income would count .
Here’s more information on how your Social Security benefits are calculated.
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What Is Your Full Retirement Age
The full retirement age is based on your birth year.
- Birth year: 1943-1954. FRA: 66
- Birth year: 1955. FRA: 66 and two months
- Birth year: 1956. FRA: 66 and four months
- Birth year: 1957. FRA: 66 and six months
- Birth year: 1958. FRA: 66 and eight months
- Birth year: 1959. FRA: 66 and 10 months
- Birth year: 1960 and later. FRA: 67
To give you an idea of how much your benefit will be reduced: based on a monthly benefit amount of $1,000, if you were born in 1960 and started receiving Social Security at age 62, your benefit would be reduced to $700.
Claiming Social Security early will permanently reduce your monthly check amount.
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.
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Do Social Security Benefits Increase With Age
Contrary to what many people think, your payment will not automatically increase to 100 percent of your full retirement benefit when you reach full retirement age, which is 66 and 2 months for people born in 1955, 66 and 4 months for people born in 1956, and will incrementally rise to 67 over the next few years.
Why Did I Get Two Social Security Checks This Month
MILLIONS of Supplemental Security Income claimants will see two checks this month as the holidays approach. This will apply to the 8million people that are projected to receive SSI in 2022, according to the Social Security Administration. … Further, the more you earn the less your SSI benefit will be.
Look At Your Investment Performance
The lower your expected long-term investment return , which is typical as investors get older, and the longer your life expectancy, the more it pays to wait to take your Social Security benefits if you can, Carson said.
So, for instance, a woman who expects a long-term investment return of 5.5% and has a life expectancy of 88 should consider claiming at age 70.
Of course, not everybody can wait to take Social Security. Some people really need the money, Carson said. And theres nothing wrong with that.
On average, however, unless you expect to earn high investment returns youre probably better off waiting to claim Social Security until at least full retirement age, or even age 70, particularly if you have decent health and want that insurance for the long run, said Carson.
Benefit Reduction For Early Retirement
We sometimes call a retired worker the primary beneficiary, because it is upon his/her primary insurance amount that all dependent and survivor benefits are based. If the primary begins to receive benefits at his/her normal retirement age, the primary will receive 100 percent of the primary insurance amount. If the spouse of a primary begins to receive benefits at his/her normal retirement age, the spouse will receive 50 percent of the primary’s primary insurance amount.
The table below illustrates the effect of early retirement, for both a retired worker and his/her spouse. For our illustration, we have used a $1,000 primary insurance amount. With this primary insurance amount and both primary and spouse retiring at their respective normal retirement ages, the primary would receive $1,000 per month and his/her spouse would receive $500 per month. The table shows that retirement at age 62 results in substantial reductions in monthly benefits. Please note that relatively few people can begin receiving a benefit at exact age 62 because a person must be 62 throughout the first month of retirement. Thus most early retirees begin at age 62 and 1 month.
Primary and spousal benefits at age 62
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To Wait Or Not To Wait
Consider taking benefits earlier if . . .
- You are no longer working and can’t make ends meet without your benefits.
- You are in poor health and don’t expect the surviving member of the household to make it to average life expectancy.
- You are the lower-earning spouse, and your higher-earning spouse can wait to file for a higher benefit.
Consider waiting to take benefits if . . .
- You are still working and make enough to impact the taxability of your benefits.
- Either you or your spouse are in good health and expect to exceed average life expectancy.
- You are the higher-earning spouse and want to be sure your surviving spouse receives the highest possible benefit.
You’re Concerned Social Security Will Disappear
Some people are concerned about potential Social Security changes in the future, such as higher retirement ages, lower benefits or higher taxes on benefits. As a result, they want to take the sure thing as soon as possible. In a 2021 Social Security summary, the government said Social Security trust funds will be depleted in 2034. Even then, however, annual Social Security taxes are projected to keep benefits at almost three-fourths of current levels.
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You Can See Your Estimated Monthly Retirement Amount Online Now
If you’re interested in seeing your estimated monthly Social Security benefits amount based on your current work history, it’s quick and easy to do. You’ll need to create a My Social Security account online.
Even if you’re still 20 or more years away from retiring, you can see an estimate of how much you could get based on last year’s income and previous years worked. You’ll see a table that shows your monthly benefit amount for retiring early, on time or delayed.
When you’re ready to collect your benefits, you can also use My Social Security to fill out a retirement application, among other things.
Why The Full Retirement Age Is Going Up
The original Social Security Act of 1935 set the minimum age for receiving full retirement benefits at age 65.
In 1983, an amendment was passed which phased in a gradual increase in age for collecting full Social Security benefits.
The retirement age increased from 65 to 67 over a 22-year period.
Full retirement age now stands at age 67.
Congress cited improvements in the health of older people which increased the life expectancy.
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How Does Full Retirement Age Affect Your Social Security Benefits
If you claim your benefits at full retirement age, you will receive your standard Social Security benefit amount. If you claim prior to FRA, you will be subject to early filing penalties that reduce your benefit by the following amounts:
- 5/9 of 1% for each of the first 36 months before FRA
- 5/12 of 1% for each subsequent month before FRA
This amounts to a 6.7% annual reduction for each of the first three years and an additional 5% reduction for each following year before FRA. If you claim benefits at 62 with an FRA of 67, you will face a full 30% reduction in benefits.
By contrast, if you claim benefits after FRA, you receive delayed retirement credits valued at 2/3 of 1% per month. This results in an 8% annual increase to your monthly benefit. Delayed retirement credits can be earned until age 70, after which time there is no financial benefit to delaying your claim. Delayed retirement credits cannot be earned if you are claiming either spousal or survivor benefits.
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.
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There’s A Cap On Social Security Money You Get Each Month
A person who earns $900,000 per year may not receive more Social Security money each month than a person who makes $200,000 per year. That’s because the Social Security Administration has a cap on how much income can be taxed by the administration. The cap amount has changed over the years and will likely continue to do so.
For 2022, the maximum taxable earnings is $147,000 in 2015, it was $118,500.
If you work more than one job and employers withhold more than the maximum from your paycheck, it’s possible the taxes could exceed the maximum amount. If that’s the case, you can claim a refund from the IRS for the money that exceeded the maximum amount, according to the SSA.
Here’s how the maximum amount of money you could get breaks down monthly in 2022:
- Collecting Social Security at age 62: $2,364
- Collecting Social Security at full retirement age: $3,345
- Collecting Social Security at age 70: $4,194
When We Can Elect To Get Social Security Benefits
It is very important to understand that the government has given you the normal year after which you will receive 100% of the social security benefits. But, it also depends on the person. Anyone willing can claim their social security benefits after turning 62, but their benefits are cut down they get only 71% of the total benefits and this will be affected permanently. When a person claims after the age of 65 but before the age of 67, the amount can increase to 87%.
Well, if there is a downgrade when we claim, there are benefits when we make a delay in claiming our social security benefits. We can get an additional 8% on the monthly payment when we delay claiming after 67, but the rise is limited to the age of 70. After that, the sum of the amounts wont rise by any amount.
Not Sure When To Sign Up For Benefits Here’s Why Your Precise Full Retirement Age Is A Good Choice
Social Security is actually pretty flexible in that it allows you to sign up for benefits at any time once you reach age 62. Now financially speaking, there’s no reason to delay your filing past the age of 70, but even so, you get a solid eight-year window of time to claim your benefits — income that could help get you through retirement.
Now you should know that your monthly retirement benefit is calculated based on your personal wage history specifically, your top 35 years of earnings. But you’re only entitled to that benefit once you reach full retirement age, or FRA.
Image source: Getty Images.
FRA depends on your year of birth, and you can consult this table to see what yours is:
Year of Birth
Data source: Social Security Administration.
Here are a few good reasons to sign up for benefits at your precise FRA — and not sooner or later.
A You Can Continue Working And Start Receiving Your Retirement Benefits
If you start your benefits before your full retirement age, your benefits are reduced a fraction of a percent for each month before your full retirement age.
You can get Social Security retirement benefits and work at the same time before your full retirement age. However your benefits will be reduced if you earn more than the yearly earnings limits.
After you reach your full retirement age, we will recalculate your benefit amount to give you credit for any months you did not receive a benefit because of your earnings. We will send you a letter that explains any increase in your benefit amount.
If you delay filing for your benefits until after full retirement age, you will be eligible for delayed retirement credits that would increase your monthly benefit. If you also continue to work, you will be able to receive your full retirement benefits and any increase resulting from your additional earnings when we recalculate your benefits. Once you reach full retirement age, your earnings do not affect your benefit amount.
If you start receiving retirement benefits before age 65, you are automatically enrolled in Original Medicare when you turn 65. If you or your spouse are still working and covered under an employer-provided group health plan, talk to the personnel office before signing up for Medicare Part B. To learn more, read our Medicare publication.
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Are Social Security Benefits Taxable At Full Retirement Age
Your age does not have an impact on whether you will owe tax on Social Security benefits. Depending on your earnings, you may pay federal taxes on Social Security benefits regardless of the age at which you claim.
Social Security benefits are taxed on amounts exceeding the “provisional income” limit set by the IRS. To calculate your provisional income, add up all non-Social Security sources of income, including nontaxable income such as municipal bond interest, and include half of your annual Social Security income.
Single filers earning provisional income between $25,000 and $34,000 and married joint filers earning between $32,000 and $44,000 will owe income taxes on 50% of their Social Security benefits. For single filers with provisional income above $34,000 and married filers above $44,000, up to 85% of Social Security benefits will be taxable.
How We Deduct Earnings From Benefits
In 2022, if youre under full retirement age, the annual earnings limit is $19,560. If you will reach full retirement age in 2022, the limit on your earnings for the months before full retirement age is $51,960.
Starting with the month you reach full retirement age, there is no limit on how much you can earn and still receive your benefits.
Let’s look at a few examples. You are receiving Social Security retirement benefits every month in 2022 and you:
Are under full retirement age all year. You are entitled to $800 a month in benefits.
You work and earn $29,560 during the year. Your Social Security benefits would be reduced by $5,000 . You would receive $4,600 of your $9,600 in benefits for the year.
Reach full retirement age in August 2022. You are entitled to $800 per month in benefits.
You work and earn $63,000 during the year, with $52,638 of it in the 7 months from January through July.
- Your Social Security benefits would be reduced through July by $226 . You would still receive $5,374 out of your $5,600 benefits for the first 7 months.
- Beginning in August 2022, when you reach full retirement age, you would receive your full benefit , no matter how much you earn.
If you are eligible for retirement benefits this year and are still working, you can use our earnings test calculator to see how your earnings could affect your benefit payments.
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