Nine out of ten people age 65 and older are receiving Social Security benefits. For 48% of married couples, and 71% of those unmarried, Social Security makes up more than 50% of their income. How and when to begin this income is one of the most important decisions many people make concerning retirement. Tens of thousands of people are making their decision every day, yet most of them do not know what their options are.
The Social Security office is well staffed with very trained and knowledgeable employees. The staff answers questions accurately; however, they are instructed not to give advice. Their job is not to advise, but to answer questions and implement decisions. If someone does not know the options, they will not ask about them, and will not be told about them. Learning and considering their options, is a brief, but essential phase of retirement planning. A wrong choice, unless it is corrected within a year, continues for life! If you decide to delay your benefits until after age 65, you should still apply for Medicare benefits within three months of your 65th birthday. If you wait longer, your Medicare medical insurance (Part B) and prescription drug coverage (Part D) may cost you more money.
|Year of Birth||Full Retirement Age|
|1955||66 & 2 Months|
|1956||66 & 4 Months|
|1957||66 & 6 Months|
|1958||66 & 8 Months|
|1959||66 & 10 Months|
|1960 & Later||67|
If you decide to delay your benefits until after age 65, you should still apply for Medicare benefits within three months of your 65th birthday. If you wait longer, your Medicare medical insurance (Part B) and prescription drug coverage (Part D) may cost you more money.
Retirement benefits are the benefit that the majority of individuals are most familiar with. The benefit amount that a person may receive for retirement is affected by eight primary factors.
These factors include:
Additionally, when estimating future benefits, it’s important to keep in mind:
The answer is that there’s no one “best age” for everyone and, ultimately, it’s your choice. The most important thing is to make an informed decision. Base your decision about when to apply for benefits on your individual and family circumstances. We hope the following information will help you understand how Social Security fits into your retirement decision.
Would it be better for you to start getting benefits early with a smaller monthly amount for more years, or wait for a larger monthly payment over a shorter timeframe? The answer is personal and depends on several factors, such as your current cash needs, your current health, and family longevity. Also, consider if you plan to work in retirement and if you have other sources of retirement income. You must also study your future financial needs and obligations, and calculate your future Social Security benefit. We hope you’ll weigh all the facts carefully before making the crucial decision about when to begin receiving Social Security benefits. This decision affects the monthly benefit you will receive for the rest of your life, and may affect benefit protection for your survivors.
Your full retirement age varies based on the year you were born. We calculate your basic Social Security benefit — the amount you would receive at your full retirement age — based on your lifetime earnings. However, the actual amount you receive each month depends on when you start receiving benefits. You can start your retirement benefit at any point from age 62 up until age 70, and your benefit will be higher the longer you delay starting it. This adjustment is usually permanent: it sets the base for the benefits you’ll get for the rest of your life. You’ll get annual cost-of-living adjustments and, depending on your work history, may receive higher benefits if you continue to work.
The following chart shows an example of how your monthly benefit increases if you delay when you start receiving benefits. Let’s say your full retirement age is 66 and your monthly benefit starting at that age is $1,000. If you start getting benefits at age 62, we’ll reduce your monthly benefit 25 percent to $750 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 would increase your monthly benefit to $1,320. This increase is the result of delayed retirement credits you earn for your decision to postpone receiving benefits past your full retirement age. The benefit at age 70 in this example is 76 percent more than the benefit you would receive each month if you start getting benefits at age 62 — a difference of $570 each month.
When thinking about retirement, be sure to plan for the long term. Many of us will live much longer than the “average” retiree, and most women live longer than men. More than one in three 65 year olds today will live to age 90, and more than one in seven will live to age 95. Social Security benefits, which last as long as you live, provide valuable protection against outliving savings and other sources of retirement income. Again, you’ll want to choose a retirement age based on your circumstances so you’ll have enough income when you need it.
Your spouse may be eligible for a benefit based on your work record, and it’s important to consider Social Security protection for widowed spouses. After all, married couples at age 65 today would typically have at least a 50-50 chance that one member of the couple will live beyond age 90. If you are the higher earner, and you delay starting your retirement benefit, it will result in higher monthly benefits for the rest of your life and higher survivor protection for your spouse, if you die first.
When you are receiving retirement benefits, your children can also be eligible for a benefit on your work record if they’re under age 18 or if they have a disability that began before age 22.
When you reach your full retirement age, you can work and earn as much as you want and still get your full Social Security benefit payment. If you’re younger than full retirement age and if your earnings exceed certain dollar amounts, some of your benefit payments during the year will be withheld.
This doesn’t mean you must try to limit your earnings. If we withhold some of your benefits because you continue to work, we’ll pay you a higher monthly benefit when you reach your full retirement age. So, if you work and earn more than the exempt amount, it won’t, on average, decrease the total value of your lifetime benefits from Social Security — and can increase them.
Here is how this works: When you reach full retirement age, we’ll recalculate your benefit to give you credit for months you didn’t get a benefit because of your earnings. In addition, as long as you continue to work and receive benefits, we’ll check your record every year to see whether the extra earnings will increase your monthly benefit.
Sourced from: Social Security Administration
Social Security 567 does not provide information on Social Security Disability. For more information on Social Security Disability, click here to download the informational brochure from the Social Security Administration.
Medicare is our country’s health insurance program for people age 65 or older. People younger than age 65 with certain disabilities, or permanent kidney failure, or amyotrophic lateral sclerosis (Lou Gehrig’s disease), can also qualify for Medicare. The program helps with the cost of health care, but it doesn’t cover all medical expenses or the cost of most long-term care. You have choices for how you get Medicare coverage. If you choose to have original Medicare coverage, you can buy a Medicare supplement policy (called Medigap) from a private insurance company to cover some of the costs that Medicare does not. A portion of the payroll taxes paid by workers and their employers cover most Medicare expenses. Monthly premiums, usually deducted from Social Security checks also cover a portion of the costs. The Centers for Medicare & Medicaid Services is the agency in charge of the Medicare program. But, you apply for Medicare at Social Security, and we can give you general information about the Medicare program.
People age 65 or older, who are citizens or permanent residents of the United States, are eligible for Medicare Part A. You’re eligible for “Part A” at no cost at age 65 if:
If you don’t meet these requirements, you may be able to get Medicare Part A by paying a monthly premium. Usually, you can purchase this coverage only during designated enrollment periods.
NOTE: Even though Social Security’s full retirement age is no longer 65, you should sign up for Medicare three months before your 65th birthday.
Before age 65, you are eligible for Medicare Part A at no cost if:
Anyone who’s eligible for Medicare Part A at no cost can enroll in Medicare Part B by paying a monthly premium. Some people with higher incomes will pay a higher monthly Part B premium.
If you’re not eligible for Part A at no cost, you can buy Part B, without having to buy Part A, if you’re age 65 or older and you’re:
If you receive your Part A and Part B benefits directly from the government, you have original Medicare. If you receive your benefits from a Medicare Advantage organization or other company approved by Medicare, you have a Medicare Advantage plan. Many of these plans provide extra coverage and may lower your out-of-pocket costs.
If you have Medicare Parts A and B, you can join a Medicare Advantage plan. Private companies, approved by Medicare, offer Medicare Advantage plans. With these plans, you can’t have a Medigap policy, because Medicare Advantage plans cover many of the same benefits a Medigap policy covers. This includes benefits like extra days in the hospital after you’ve used days that Medicare covers. Medicare Advantage plans include:
If you decide to join a Medicare Advantage plan, you use the health card that you get from your Medicare Advantage plan provider for your health care. Also, you might have to pay a monthly premium for your Medicare Advantage plan because of the extra benefits it offers. You can enroll in a Medicare Advantage plan during your initial enrollment period, the first time you’re eligible for Medicare. You can also enroll during the annual Medicare open enrollment period from October 15 – December 7 each year. The effective date for the enrollment is January 1 of the upcoming year. There are also special enrollment periods for some situations.
Anyone who has Medicare Part A or Part B is eligible for Part D (Medicare prescription drug coverage). Joining a Medicare prescription drug plan is voluntary, and you pay an extra monthly premium for the coverage. Some beneficiaries with higher incomes will pay a higher monthly Part D premium.
If you don’t enroll in a Medicare drug plan when you’re first eligible, you may pay a late enrollment penalty if you join a plan later. You’ll have to pay this penalty for as long as you have Medicare prescription drug coverage. However, you won’t pay a penalty if you have Extra Help or another creditable prescription drug plan. To be creditable, the coverage must pay, on average, at least as much as Medicare’s standard prescription coverage. You can enroll during your initial enrollment period, the first time you’re eligible for Medicare. You can also enroll during the annual Medicare open enrollment period from October 15 – December 7 each year. The effective date for the enrollment is January 1 of the upcoming year. There are also special enrollment periods for some situations.
For more information on Medicare, click here to download the Medicare Publication (directly from the Social Security Administration.
Sourced from: Social Security Administration