By Barry Zimmer on December 31st, 2020 in Elder Law
When you are preparing for your elder years, you should gain a firm understanding of the Social Security guidelines. You have some choices to make, and we provide an explanation of the options that are available to you in this post.
Full Benefit Eligibility Age
The age at which you become eligible to receive your full benefit is not a straightforward number that is the same for everyone. People that were born between 1943 in 1954 become eligible when they are 66, but the numbers graduate by two months per year after that.
This means that you would become eligible two months after your 66th birthday if you were born in 1955, and it would be four months after that birthday if you were born in 1956. The eligibility age goes up by two months per year in this manner until it reaches 67 for people that were born in 1960.
At that point, the gradual increases come to a halt. Anyone that was born in 1960 or any later year is eligible for a full benefit when they are 67 years old.
Early Retirement
You can choose to accept your Social Security benefit when you are as young as 62. If you do this, your benefit would be 25% to 30% less than your full benefit. The exact amount of the reduction would be based on the year of your birth.
There is another drawback to the early retirement option. You can earn up to $18,240 when you are receiving an early benefit without being penalized. Your benefit is reduced by one dollar for every two dollars that you earn above this amount.
Delayed Retirement Credits
You can go in the other direction and decide to hold off after you reach the full retirement age. If you delay the submission of your application, you earn delayed retirement credits. Your benefit will increase by 8% for every year that you delay, but the accrual of delayed retirement credits stops when you reach the age of 70.
How Much Will You Get?
Your benefit is based on your 35 highest earning years. There is a maximum amount of income that is subject to Social Security taxes, and in 2020, this figure is $132,900. As a result, there is also a maximum monthly benefit of $3011 this year.
The average Social Security benefit is $1503 in 2020, and this tells you something about the modest nature of Social Security payouts. You can find out exactly what you can expect to receive based on your work record if you set up an account on the Social Security Administration website.
Social Security Rules for Spouses
A married person can receive a spousal benefit that is equal to half of the benefit that their spouse is receiving. They can alternately choose to accept a benefit based on their own work record if that amount is higher than half of the spouse’s benefit.
If you are a widow or widower, you would receive the full benefit that would have gone to your spouse if it is higher than yours, but you cannot take two separate benefits.
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