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When To Start Retirement Benefits

Federal Insurance For Private Pensions

Earliest Date To Apply n Advance for Social Security Retirement Benefits

If your company runs into financial problems, you’re likely to still get your pension.

Retirement Benefits For Your Family

Even if your spouse has never worked outside your home, he or she may be eligible for spousal benefits based on your Social Security earnings record. Children may be eligible as well. Spousal benefits can be as much as 50 percent of your benefit. There are additional options for widows and widowers. The rules vary depending on the situation, so you should talk to a Social Security representative about the options available to you.

What Is The Future Of Social Security

As of June 2022, the Social Security Trust Fund is projected to have enough resources to cover all promised benefits until 2035 when, absent a change from Congress, benefits would need to be cut for all current and future beneficiaries to about 80% of scheduled benefits.2 Over the longer term, changes to the full retirement age or means testingâwhich could reduce or eliminate benefits based on your other income sourcesâmay also be considered.

If you’re skeptical about the future of Social Security or wary of potential changes, you may be tempted to start benefits early, assuming that it’s better to have something than nothing. Regardless of your situation, if you are concerned about the future prospects for Social Security, then that’s a good reason to save moreâand earlierâfor your retirement.

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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 you’ve already received . Then, you could restart benefits at a later date to take advantage of a higher payout. Be aware that you’re limited to one withdrawal per lifetime.

For example, let’s 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.

Your Mail From Service Canada

When to Start Social Security Retirement Benefits (spreadsheet)

Service Canada usually sends mail in beige envelopes. This year, however, we will be sending your 2022 CPP and OAS T4 tax slips in a white envelope.

All envelopes containing official documents from Service Canada will feature the Canada wordmark.

The Canada Pension Plan retirement pension is a monthly, taxable benefit that replaces part of your income when you retire. If you qualify, youll receive the CPP retirement pension for the rest of your life. To qualify you must:

  • be at least 60 years old
  • have made at least one valid contribution to the CPP

Valid contributions can be either from work you did in Canada, or as the result of receiving credits from a former spouse or former common-law partner at the end of the relationship.

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How Long Will You Live In Retirement

Based on current estimates, a 65 year old man can expect to live approximately 18 years in retirement, and a 65 year old woman can expect to live about 20 years, but many people live longer. Planning to live well into your 90s can help you avoid outliving your income.

The worksheet takes into account some factors that impact your retirement savings. First, investing – because it involves risk. Second, inflation – because todays dollars will usually buy less each year as the cost of living rises. Your target savings rate includes any contributions your employer makes to a retirement savings plan for you, such as an employer matching contribution. If, for example, you are in a 401 plan in which you contribute 4 percent of your salary and your employer also contributes 4 percent, your saving rate would be 8 percent of your salary.

If you are not currently saving this amount, dont be discouraged. The important thing is to start saving even a small amount and increase that amount when you can. Come back and update this worksheet from time to time to reflect changes and track your progress.

Here are a few tips on how to save smart for retirement:

To track other resources you may have in retirement, start by getting your Social Security statement and an estimate of your retirement benefits on the Social Security Administrations website, www.socialsecurity.gov/mystatement.

Get started today for a secure financial future!

Already Enrolled In Medicare

If you have Medicare, you can get information and services online. Find out how to .

If you are enrolled in Medicare Part A and you want to sign up for Part B, please complete form CMS-40B, Application for Enrollment in Medicare Part B . If you are applying for Medicare Part B due to a loss of employment or group health coverage, you will also need to complete form CMS-L564, Request for Employment Information.

You can use one of the following options to submit your enrollment request under the Special Enrollment Period:

  • Fax or mail your CMS-40B, CMS-L564, and secondary evidence to your local Social Security office .
  • Note: When completing the forms CMS-40B and CMS-L564:

    • State I want Part B coverage to begin in the remarks section of the CMS-40B form or online application.
    • If possible, your employer should complete Section B.
    • If your employer is unable to complete Section B, please complete that portion as best as you can on their behalf and submit one of the following forms of secondary evidence:
      • Income tax form that shows health insurance premiums paid.
      • W-2s reflecting pre-tax medical contributions.
      • Pay stubs that reflect health insurance premium deductions.
      • Health insurance cards with a policy effective date.
      • Explanations of benefits paid by the GHP or LGHP.
      • Statements or receipts that reflect payment of health insurance premiums.

    Some people with limited resources and income may also be able to get .

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    Comparing Your Life Expectancy

    Once you know the break-even point, it may be useful to know how that compares with your life expectancy. Many people underestimate their life expectancy in their later years. It may surprise you to learn that males who reach age 65 live another 16 years on average, and a woman at age 65 can expect to survive another 19 years. See this page for more about life expectancy, and a link to a table on Social Security Online.

    What youll find is that if you rely solely on these tables, men have a small incentive to wait and women have a larger incentive to wait . You may want to adjust for factors indicating youre likely to live longer or shorter than the average person your age.

    Taxes On Your Benefits

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    Your Social Security benefits may be partially taxable if your combined income exceeds certain thresholds. Regardless of how much you make, the first 15% of your benefits are not taxed.

    The SSA defines combined income using this formula:

    • Your adjusted gross income + nontaxable interest + half of your Social Security benefits = your combined income

    If you file your federal tax return as an individual and your combined income is $25,000 to $34,000, you may have to pay income tax on up to 50% of your benefits. If your combined income is more than $34,000, you may have to pay tax on up to 85% of your benefits.

    If youre married, filing a joint return, and your combined income is $32,000 to $44,000, you may have to pay income tax on up to 50% of your benefits. If your combined income is more than $44,000, you may have to pay tax on up to 85% of your benefits.

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    Other Pensions Might Reduce Your Social Security Benefits

    Your benefits will be affected if you have a pension from a job that didnt have Social Security taxes taken out of your paycheck. Common examples include people who worked for a public education system, railroad workers and Federal government employees hired before 1984 who are covered by the Civil Service Retirement System .

    Two complicated provisions will affect your claiming strategy: the Windfall Elimination Provision and the Government Pension Offset . The WEP reduces your own benefits by a discounted factor based on how many years you worked in jobs that did not withhold Social Security taxes. The GPO reduces your spousal and survivor benefits by two-thirds of the amount of your noncovered pension.

    A Guide On Taking Social Security

    Deciding when to take Social Security depends heavily on your circumstances. You can start taking it as early as age 62 , or you can wait until you’ve reached full retirement age or age 70 based on your work history. While there’s no “correct” claiming age for everybody, the rule of thumb is that if you can afford to wait, delaying Social Security can pay off over a long retirement. Here are some guidelines to consider.

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    How Long Will It Take To Process Your Application

    We begin to process your application once we receive your completed application form. It will take:

    • 7 to 14 days for online applications
    • normally within 120 days for applications delivered at a Service Canada Centre
    • normally within 120 days for applications sent by mail

    It could take longer to process your application if Service Canada does not have a complete application.

    Social Security Cola : When Will My Benefits Increase Begin

    Retirement Planning

    This week, the Social Security Administration announced the biggest payment increase for the program in decades. Every year since 1975, the SSA has instituted a cost-of-living adjustment after analyzing rates of inflation to see how much to increase beneficiary amounts to help recipients keep up with the cost of goods.

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    The latest COLA is a record 8.7% bump, taking into account the rampant rates of inflation that have been affecting Americans all year. As noted by CBS, the last time Social Security saw this kind of increase was back in 1981 when the SSA announced a COLA of 11.2%.

    The news of the 2023 payment increase comes as a relief to the many seniors and other beneficiaries of Social Security who have been struggling to pay bills and buy groceries as prices keep rising.

    According to the latest Consumer Price Index report , the cost of food is up 11.2% over this time last year while utilities like electric and piped gas are up 19.8% and the cost of housing is up 6.6%.

    With the payment increase in 2023, Forbes said 8.7% more will equate to an average added monthly benefit of $144 for individuals and $240 extra for couples filing jointly. But the biggest question on many peoples minds is: When will these increases start being reflected in monthly payments?

    Medicare premium decreases will also take effect in January 2023.

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    Will Your Expenses Decrease After You Retire

    Retirement could be more expensive than you expect.

    If you’re planning an active retirement or carry a mortgage or other debt, retirement may be more expensive than you expect. Some regular expenses like your out-of-pocket health care costs will likely increase as you get older. You can protect your retirement lifestyle by reducing your largest expenses. You can also increase your regular income by claiming at your full Social Security benefit age or later. If you claim earlier, your monthly benefit could be reduced by as much as 30 percent.Create a retirement budget.

    Retirement could be more expensive than you expect.

    If you’re planning an active retirement or carry a mortgage or other debt, retirement may be more expensive than you expect. Some regular expenses like your out-of-pocket health care costs will likely increase as you get older. You can protect your retirement lifestyle by reducing your largest expenses. You can also increase your regular income by claiming at your full Social Security benefit age or later. If you claim earlier, your monthly benefit could be reduced by as much as 30 percent.Create a retirement budget.

    Maintain your lifestyle by planning ahead.

    Maintain your lifestyle by planning ahead.

    Many people find retirement is more expensive than expected.

    Many people find retirement is more expensive than expected.

    Retiring Early Will Reduce Your Income Benefit

    You can begin receiving Social Security benefits before your full retirement age, as early as age 62. However, if you retire early, your Social Security benefit will be less than if you wait until your full retirement age to begin receiving benefits. Your retirement benefit will be reduced by 5/9ths of 1 percent for every month between your retirement date and your full retirement age, up to 36 months, then by 5/12ths of 1 percent thereafter. For example, if your full retirement age is 67, you’ll receive about 30 percent less if you retire at age 62 than if you wait until age 67 to retire. This reduction is permanent–you won’t be eligible for a benefit increase once you reach full retirement age.

    However, even though your monthly benefit will be less, you might receive the same or more total lifetime benefits as you would have had you waited until full retirement age to start collecting benefits. That’s because even though you’ll receive less per month, you might receive benefits over a longer period of time.

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    What If I Take Benefits Early

    If you choose to take your own Social Security benefit before your full retirement age, be aware that the benefit is permanently reduced by five-ninths of 1% for each month. If you start more than 36 months before your full retirement age, the worker benefit is further reduced by five-twelfths of 1% per month for the rest of retirement.

    For example, let’s assume you stop working at age 62. If your full retirement age is 67 and you elect to start benefits at age 62, the reduced benefit calculation is based on 60 months. So, the reduction for the first 36 months is 20% and then another 10% for the remaining 24 months. Overall, your benefits would be permanently reduced by 30%.

    Whats Your Social Security Break

    How to Retire in 7 Years Starting with $0

    If youre looking to maximize your total lifetime Social Security payout, youll want to conduct a break-even analysis to determine when you should start drawing your benefits.

    Your break-even age occurs when the total value of higher benefits starts to exceed the total value of lower benefits .

    For example, if you are eligible to collect a reduced $900 benefit at age 62 plus 1 month, and your benefit would increase to $1,251 at age 65 and 10 months, your estimated break-even age is 75 years and 5 months.

    If you expect to live beyond that age, it could make financial sense to delay drawing benefits. The Social Security Administrations life expectancy calculator can help you decide.

    When it comes to calculating a start date for Social Security benefits, however, theres not an age thats appropriate for everyone. Consider your own financial needs, health and other retirement plans before making the call. If you cant reasonably afford to live without taking benefits, it may make little sense to delay taking your benefit.

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    Taking Social Security: How To Benefit By Waiting

    For those who are able to do so, it may make sense to wait even longer, because youll receive a larger monthly benefit even more than your full benefit. Every month past your full retirement that you delay, Social Security will increase your check by about 0.7 percent per month.

    If your full retirement age is 66, then heres how much your check would increase:

    Retirement age New benefit A $1,000 check becomes
    $1,320

    So if your full retirement age is 66, then if you can wait two more years and claim benefits at age 68, youll increase your monthly check by 16 percent. In this case, if your full benefit were $1,000 a month, your new benefit would become $1,160 per month. And youll still receive cost of living adjustments on top of this amount, typically raising your payout a little each year.

    Workers have other ways to grow their Social Security benefits, too, but its important to start early.

    What Information Will I Get About My Retirement Benefits Once Opm Finishes Processing My Application

    OPM will send you a welcome letter and personalized retirement booklet. Your booklet will detail your entire retirement benefits package, including how much your monthly annuity payment will be, your enrollment in health care and life insurance coverage, and information you will need to prepare your annual tax returns.

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