Many people in the United States count down the days until their next birthday, no matter how far off it is (66 and 2 months, 66 and 4 months, etc.). For those born in the United States between 1955 and 1959, the full retirement age is between 66 and 67. They will be able to collect their full Social Security benefit at that point.
What happens to your Social Security benefits when you reach your full retirement age? Read on for a few key points to keep in mind. Upon reaching retirement age, many Americans rely on Social Security income. It might be challenging to navigate the Social Security application process and determine your benefits.
What Can You Expect from Social Security Once You've Reached Retirement Age? In the United States, everyone who receives a paycheck pays into the Social Security system. They will be eligible for benefits if they have accumulated 40 labor credits by reaching retirement age.
Whether you start getting benefits at age 62 or wait until full retirement age affects how much money you'll get from Social Security. Those born between 1943 and 1954 have till they turn 66 to enter full retirement. However, the full retirement age slowly increases yearly until it reaches 67 for those born in 1960 or later.
Gains Rewarded Regularly
In November 2021, a typically retired beneficiary received $1,563.82 per month in benefits. To keep up with rising prices, the Social Security Administration (SSA) periodically raises benefit payments using a system known as a cost-of-living adjustment (COLA). Income (SSI) recipients will, Whether you're married, single, or have kids, affect how much money you have to put aside each month. In 2022, a retiree whose monthly income was $1,565 before the COLA would receive an average raise to $1,657.
Prepare for Financial Independence in Old Age Retirement income should include Social Security, but not only. Most recipients of Social Security benefits receive barely 40% of their average pre-retirement income. While workers can begin receiving benefits as early as age 62, doing so will permanently limit payouts; thus, doing so is not recommended.
"Taking benefits too early or too late could have serious consequences for your financial security in old age. Since few workers have access to pensions these days, Social Security is often their only source of guaranteed income in retirement." CFP® New York resident Stephanie Genkin states she is the founder of My Financial Planner, LLC. Once you begin receiving Social Security benefits, the amount you receive each month is guaranteed (along with cost-of-living adjustments).
Application Procedure for Social Security
After your application is received, it will be reviewed by the Social Security Administration, who will contact you if they have any questions. The Social Security Administration (SSA) will assess your application and notify you of its decision through a letter if it has all the information it requires to do so.
Applicants have up to four months before the date they would like their awards to be delivered before submitting their applications. Peter J. Creedon of New York City's Crystal Brook Advisors cautions, "If you continue to work and are younger than full retirement age, your benefits may be taken back ($1 for every $2 or $3 earned) owing to earned income restrictions being surpassed."
How Long Can We Put It Off?
You can begin receiving Social Security payments as early as age 62, but your payout will increase to age 70. After 70, there is no point in putting it off any longer. If you were born in 1960 but are just now collecting retirement benefits at age 62, your monthly income will be cut in half. However, if you wait until you're 70 to enroll, you can increase your payment by 8 percent yearly.
It is possible to start receiving Social Security payments before you reach full retirement age if your yearly income is less than $18,960 in 2021 or $19,560 in 2022. Over the 2021 and 2022 thresholds, Social Security taxes will amount to 14% of earnings above that amount
Tools for Assessing Potential Gains
Your Social Security payment amount is based on the 35 highest earning years of your life. Working into your 60s and earning a higher salary than you did earlier in your career will boost the amount of money you receive from Social Security. Waiting till age 70 is ideal if you're healthy and don't need the money right now. Delaying retirement until age 70 is recommended by Robert R. Schulz, CFP®, president of Schulz Wealth in Mansfield, TX, who sees Social Security as protection against outliving one's money.
