As you get closer to retirement, your decisions can significantly impact how much money you get from Social Security, some of which are irreversible.
Be aware of these 7 crucial factors
1. Full Retirement Age of Social Security
Your monthly benefit amount will vary depending on whether you claim your Social Security payments a few years before or after reaching Full Retirement Age (FRA).
Your Social Security’s FRA is when you are eligible for 100% of your Social Security benefits. Beneficiaries born between 1943 and 1954 have an FRA of 66, which eventually increases to 67 for those born in 1960 or after. Your benefits can decrease if you apply for benefits before FRA. If you register at the age of 62, your benefits could be reduced by up to 30%.
2. How Do You Qualify for Social Security Benefits?
You must earn a minimum of 40 “credits” throughout your employment to be eligible for Social Security benefits in retirement. You can earn up to four credits every year. Hence, qualifying for Social Security takes 10 years of labor.
3. What Factors Go Into Determining Your Social Security Benefits?
To compute your primary insurance amount (PIA), Social Security considers your highest 35 years of earnings, adjusted to a national average salary index. The years without earnings will be reported as zero if you have less than 35 years of earnings.
The amount of Social Security benefits you can get is determined by your retirement age. The maximum monthly benefit for someone reaching Full Retirement Age (FRA) in 2022 is $3,345. The maximum monthly amount for someone filing at age 70 is $4,194. The maximum monthly benefit for someone retiring early, at age 62, is $2,364.
4. The Social Security Cost-of-Living Adjustment (COLA) is made every year
One of the finest aspects of Social Security benefits is that they are adjusted annually for inflation by the government, which helps you keep up with rising living costs.
Because the COLA is based on changes in a federal consumer price index (CPI), its magnitude is determined mainly by the government’s overall inflation levels, which are different from those used in the monthly consumer price index (CPI) by economists and others.
5. The longer you wait to file for Social Security, the higher your monthly benefits will be.
You can file for Social Security benefits as soon as you turn 62. However, if you do that before reaching your Full Retirement Age (FRA), it will permanently reduce your payments by up to 25% to 30%, depending on your FRA.
You will receive 100% of your earned benefits if you wait until you reach FRA to collect Social Security payments. However, if you delay filing until you’re 70 to claim your Social Security benefits, your monthly Social Security income will increase by 8% annually.
6. Consider Social Security spousal benefit
When it comes to Social Security, marriage is rewarded. A spousal benefit of up to 50% of the other spouse’s Social Security benefit can be taken by one spouse. For example, if your Social Security benefit is $2,000 monthly, but your husband’s benefit is only $500, your spouse can receive a $1,000 spousal benefit, bringing in $500 more in monthly income.
Taking the spousal benefit at an early age, such as 62, can cut the amount, and you may end up earning as low as 32.5% of the higher earner’s benefit.
7. Your Social Security benefits may be reduced if you have other pensions.
If you have a pension from employment where Social Security taxes were not deducted from your income, your benefits would be affected. These include people who worked for a public school system, railroad workers, and the federal government hired before 1984 and covered by the Civil Service Retirement System (CSRS).
Spouses and children can get Social Security survivor benefits.
You can collect a Social Security survivor benefit if your spouse passes away before you. However, this will not be in addition to your benefits – one of them has to be chosen.
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Bio:
Mark, a lifelong Tulsan graduated from Westminster College, Fulton, Missouri with a Bachelor of Arts in Accounting. Mark served in the United States Army as a Captain in the 486th Civil Affairs BN. Broken Arrow, Oklahoma and retired in 1996. Mark is married to his high school sweetheart Jenny and has four beautiful children. Mark’s passion for his work, which includes over 20 years in the Financial Industry started as an Oklahoma State Bank Examiner. Mark examined banks throughout Oklahoma gaining a vast knowledge and experience on bank investments, small business and family investments. Mark’s experiences include being formally trained by UBS Wealth Management, a global investment firm where he served as a Financial Consultant specializing in Wealth Management for individuals & families. Mark is a licensed Series 24 and 28 General Securities Principal and an Introducing Broker Dealer Financial Operations Principal. Additionally, Mark is a Series 7 and 66 stockbroker and Investment Advisor focusing on market driven investments for individuals, businesses and their families.
Mark specializes in providing financial knowledge, ideas, and solutions for federal employees, individuals, families and businesses. We serve as your advocate, and assist you in the design and implementation of financial strategies while providing the ideas to maximize your security and wealth. Our goal is to give you maximum control of your financial future. We provide the expertise to help you with personal issues such as: practical tax Ideas, risk management, investment solutions, and estate preservation.
Additionally, we’ve counseled hundreds of employees on their transitions from careers in federal government, and private industry to their next life stage, whether that is retirement or a second career. We specialize in devising strategies that roll your TSP, 401(k), pension plan, to a suitable IRA to meet your objectives.
Disclosure:
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