years of no earnings or low earnings, your benefit amount may be lower than if you had worked steadily. Your age at the time you start receiving benefits also affects your benefit amount. Although you can begin to claim benefits early at age 62, the longer you wait to retire (up to age 70), the higher your retirement benefit. You can find out more about future Social Security benefits by signing up for a mySocialSecurity account at the Social Security website , ssa.gov , so that you can view your online Social Security Statement. Your statement contains a detailed record of your earnings, as well as estimates of retirement, survivor and disability benefits. If you are not registered for an online account and are not yet receiving benefits, you will receive a statement in the mail every year, starting at age 60. You can also use the Retirement Estimator calculator on the Social Security website, as well as other benefit calculators that can help you estimate disability and survivor benefits. Retiring at Full Retirement Age Your full retirement age depends on the year in which you were born.
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 will not 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 is because even though you will receive less per month, you might receive benefits over a more extended period of time. Delaying Retirement Will Increase Your Benefit For each month that you delay receiving Social Security retirement benefits past your full retirement age, your benefit will increase by a certain percentage. This percentage varies depending on your year of birth. For example, if you were born in 1943 or later, your benefit will increase 8 percent for each year that you delay receiving benefits, up until age 70. In addition, working past your full retirement age has another benefit: it allows you to add years of earnings to your Social Security record. As a result, you may receive a higher benefit when you do retire, especially if your earnings are higher than in previous years. Working May Affect Your Retirement Benefit You can work and still receive Social Security retirement benefits, but the income you earn before you reach full retirement age may affect the amount of benefit you receive. Here’s how: If you are under full retirement age: $1 in benefits will be deducted for every $2 in earnings you have above the annual limit. In the year you reach full retirement age: $1 in benefits will be deducted for every $3 you earn over the annual limit (a different limit applies here) until the month you reach full retirement age.
ESTATE PLANNING
An Overview of Social Security Retirement Benefits and the Application Process
Year You Were Born
Full Retirement Age
1943 – 1954
66
1955 1956 1957 1958 1959
66 and 2 months 66 and 4 months 66 and 6 months 66 and 8 months 66 and 10 months
Tia Lee CFP ® , CTFA Director of Wealth Planning Applying for Social Security retirement benefits can be a confusing process, and many are unaware of all of the benefits available to retirees. Social Security was initially intended to provide older Americans with continuing income after retirement. Today, though the scope of Social Security has been widened to include survivor, disability and other benefits, retirement benefits are still the cornerstone of the program.
1960 and later
67
How Do You Qualify for Retirement Benefits? You earn Social Security credits when you work and pay Social Security taxes (FICA on some pay stubs). You can earn up to four credits each year. You generally need 40 credits (10 years of work) to be eligible for retirement benefits. How Much Will Your Retirement Benefit Be? Your retirement benefit is based on your average earnings over your working career. Higher lifetime earnings result in higher benefits, so if you have some
If you were born on January 1 of any year, refer to the previous year to determine your full retirement age. If you retire at full retirement age, you’ll receive an unreduced retirement benefit. Retiring Early Will Reduce Your 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
14 PERSPECTIVE Fall 2021
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